The Chinese blockchain ecosystem has been on a tear recently, as government endorsement has led to a massive influx of investments for their operations. However, Rhino Data, an investment platform, is providing clear insights on who really got to cash out amongst the country’s blockchain startups.
Recently, the firm collaborated with news medium Xinhua Finance to release its blockchain investment and financing report for 2019. Amongst other things, the report showed that investment in China’s blockchain space slowed down significantly last year, although it also showed some promise for the future.
Blockchain Steadily Growing on the Back of Government Approval
As the report showed, 2019 saw the closure of 245 financing and investment deals in China’s blockchain space in total, with a total investment sum of $3.5 billion. Both numbers were about 50 percent lower than the respective sums for 2018, although the government’s general stance prior to October might have caused that.
Before October, Beijing had made a point to not particularly address blockchain and crypto companies in the country- except for late in 2017, when it banned crypto exchanges and Initial Coin Offerings (ICOs). Most likely, uncertainty over how the government could swing in the future deterred a lot of investors from making moves into the country’s blockchain space.
The report also showed that early-stage investments reduced as the year went by, and could only amount to a total of 43 percent of investments. As the H2 2019 rolled on, the sector saw more of acquisitions and strategic investments. The most prominent investment areas included decentralized finance platforms, exchange platforms, and blockchain market intelligence platforms.
Traditional venture capitalists were also reported to have seen a decline in involvement across the space throughout last year, as most of the investments came from crypto funds. Geographically, blockchain startups were more attracted to economic and technological hotspots such as Shenzhen, Beijing, Hangzhou, and Shanghai- however, some second-tier cities were said to be catching up to this trend as well.
Time for Washington to Act
As stated earlier, the flurry of investments into China’s blockchain space became especially prominent after President Xi Jinping made a rousing endorsement of the technology in October. At the time, the president encouraged both private and public agencies to find innovative ways to integrate blockchain into their operations, adding that the technology will play a significant role in achieving the government’s objective of becoming the top economy globally.
Over the next few weeks, blockchain patents and companies sprang up from seemingly every corner of China. Interest in the technology has also been bolstered by reports that the Chinese government is working on launching a digital asset for making payments and transactions across the country.
Several American financial and tech experts have also called on the U.S. government to emulate its biggest rival as regards digital invocation. Last week, SEC Commissioner Hester Pierce attended the Crypto Finance Conference in Switzerland, where she explained that China is currently outpacing the United States n digital currency innovation. As she summarized, it is time for Washington to learn from what Beijing is doing and take out the positives.