Crypto Market’s Maturity Fuels Crypto Investment & Adoption
According to a report released on Tuesday by KPMG, venture capital firms have put $14.2 billion in cryptocurrency-related investments during the first quarter of 2022.
During this time, the four largest investors were the German Trade Republic ($1.1 billion), the digital asset custody platform Fireblocks ($550 million), the FTX bitcoin exchange ($500 million), and Consensys, a firm that builds Ethereum software.
The report’s authors, Anton Ruddenklau, global head of fintech for KPMG, and his teams, noted that investment data for the first quarter of 2022 are already more than double what they were last year.
The study underlines the space’s growing maturity as well as the diversity of technologies and solutions that are attracting capital as an outcome.
What is behind this maturity?
Cryptocurrency is banned in China but the table has early turned for the rest of the world.
KPMG said that underdeveloped markets such as Africa’s will potentially generate significant growth. This is explained by Binance’s latest effort to launch a digital hub in Nigeria.
Last week, the leading exchange was said to discuss this new collaboration with the West African nation. The purpose is to achieve steady economic growth through digital innovation.
The growing interest in the use of cryptocurrencies is also driven by the acceptance of Bitcoin as a legal tender in El Salvador and the Central African Republic, according to the report.
On the other hand, the adoption of cryptocurrencies is being driven by compulsory circumstances.
Iran and Russia, both of which have been subjected to severe sanctions, clearly demonstrate this point. Iran is moving forward with the use of cryptocurrency for imports while Russia has recently approved the use of cryptocurrency payments in international trade.
In March, there were rumors that Russia was considering accepting Bitcoin as payment for oil and gas.
The Bank of Russia then shifted to enable cross-border payments in crypto. Iran, on the other hand, legalized the use of Bitcoin and alternatives for imports.
In addition to this, Fatemi Amin, who is the Minister of Industry, Mines, and Trade, presented a set of regulations for the supply of energy and the transaction of trade.
Cautious Approach by Regulators
Unlike China, which had previously banned crypto trading, the rest of the world has been extremely cautious about crypto. Up to this point, it seems that jurisdictions are inclined to embrace the technical aspect of the market while protecting consumers.
Despite the fact that the Russian central bank counts on crypto to handle cross-border payments, authorities prefer using stablecoin and digital ruble in order to foster international transactions.
A local news outlet reported that the country is in talks with a number of countries to explore stablecoin settlements for cross-border payments. In other words, cryptocurrency is a temporary solution to evade sanctions.
Russia is also eyeing a stablecoin that is based on state currencies – a digital ruble. This type of approach becomes increasingly common among global authorities.
China has developed an advanced digital yuan and put it into experiments. Meanwhile, the country is seeking to expand agreements for the purchase of Russian raw materials such as gas and oil.
This is evidently not a positive scenario for the majority of European Union countries, especially when the winter approaches.
Central bankers from the International Monetary Fund (IMF) and the Bank for International Settlements (BIS) said in favor of the central bank digital currency and how it could establish a diverse monetary ecosystem by implementing the technical capabilities of cryptocurrencies.
Things are blowing hot and cold on the side of the U.S. and the Federal Reverse (Fed).
There has not been much progress since Jerome Powell’s statement to explore the digital dollar, and the cryptosphere is watching China take the lead in its CBDC’s development.