Despite war and inflation, crypto markets continue to mature (KPMG)

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The world’s leading accounting firm – KPMG International – claimed in one of its recent reports that the cryptocurrency market has shown increasing maturity over the past few months. This comes despite the ongoing military conflict between Russia and Ukraine and record inflation spreading in some countries.

It’s also worth noting that most digital assets are trading well below their 2021 all-time highs, but that hasn’t stopped investment in the space. Leading entities like Trade Republic, Fireblocks, and FTX have allocated billions of dollars to support startups that are part of the ecosystem.

The gruesome reality

The health catastrophe of COVID-19, rising inflation, the military conflict between Russia and Ukraine, and the energy crisis, among others, are all factors that have directly or indirectly affected a significant part of the globe.

In addition to claiming millions of lives, the coronavirus pandemic has severely affected the global financial system. The stay-at-home rules, along with the controversial mass printing of fiat money that some central banks did, were preconditions for a future currency crisis simply because the increase in the amount of money in circulation did not not responded to paralyzed production.

As a result, the inflation rate has spiked for decades, with Turkey, UK, US and others being such examples.

The energy crisis, which began to affect some regions in 2021, has intensified in recent months due to the Russian-Ukrainian military conflict and is another component that is pushing the economy down.

The world’s largest country by landmass has halted some of its gas deliveries to several countries that had previously imposed sanctions on it. As the winter season approaches in Europe, uncertainty is growing as some states may find themselves without sufficient energy supplies during the colder months.

Unsurprisingly, the negative trends have taken their toll on almost every financial market, including the crypto sector. The current global market capitalization of cryptocurrencies stands at around $1 trillion, while in November last year it exceeded $3 trillion. Bitcoin, for its part, is currently sitting around 70% lower than its ATH less than a year ago.

Despite this, the crypto market is maturing

In contrast to this obvious decline, KPMG International believes the digital asset market continues to mature. The consultancy said many investors focused on the industry in the first half due to uncertainty in traditional finance and doled out billions of dollars.

German online brokerage – Trade Republic – has raised $1.1 billion to support organizations in the digital asset space. Crypto custodian Fireblocks secured a $550 million fundraise and leveraged an $8 billion valuation. Sam Bankman-Fried’s flagship exchange – FTX – closed a $400 million Series E venture capital round and is currently worth over $32 billion.

In total, investments in the crypto space since the start of 2022 amount to $14.2 billion. That’s significantly less than the $32.1 billion in 2021, but more than 2019 and 2020 combined.

Total global crypto investments per year
Total global investments in the crypto industry by year, Source: KPMG

It should be noted, however, that the interest in the crypto industry was not so impressive in 2019 and 2020. Talking about the record investments in 2021, these could be explained by the bull run when the bitcoin and many altcoins have reached their all-time highs.

Additionally, giant institutions like Tesla have bought billions worth of BTC, while top companies like Expedia, PayPal, Rakuten, and Etsy have started accepting crypto payments.

The hype peaked in September 2021 when El Salvador became the first country to adopt bitcoin as legal tender within its borders.

KPMG’s Crypto Efforts

The entity started interacting with the cryptocurrency industry in 2020. Back then, it introduced a project called KPMG Chain Fusion, which helps traditional financial firms provide well-managed digital asset services .

In February this year, KPMG’s Canadian subsidiary made its first cryptocurrency investments by adding Bitcoin (BTC) and Ether (ETH) to its corporate treasury.

A few months later, he hired Ian Taylor to lead the company’s UK crypto team and guide its Web3 efforts. Being also an executive director of CryptoUK, he has a wealth of experience in the field.

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