Investments in crypto hit a new record of $17 billion, but Indian funds are yet to jump on the bandwagon

Investments in crypto hit a new record of $17 billion, but Indian funds are yet to jump on the bandwagon
  • The year has recorded investments worth $17 billion in the crypto space already, the largest in any year so far.
  • According to a whitepaper by IndiaTech, Indian companies only received 0.2% of the $5.5 billion invested globally as of May.
  • While foreign funds are still dipping their toe in Indian crypto companies, local investors remain wary due to regulatory uncertainty.
Globally, the crypto industry’s fortunes may be turning around for the better. Nothing spurs growth for an industry more than investor interest, and it seems that the crypto industry is getting the best kind.

According to a Bloomberg report based on data from Pitchbook, venture capital funds have invested $17 billion into the industry during the first half of this year, surpassing numbers recorded in any year so far.

The report comes a mere three months after Pitchbook disclosed that investments worth $3 billion have gone into cryptocurrency and blockchain startups in the first quarter of 2021, from January to March.

However, only a very small part of these investments seems to be flowing into Indian crypto companies.

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Crypto investments are happening in India too — just on a smaller scale

While the country still grapples with regulations, foreign funds are scooping up the early benefits of startups founded by Indians in the blockchain ecosystem, while local investors are still wary.

For instance, Dubai-based crypto investment fund FD7 Ventures had launched a $250 million micro-fund in India in March, meant to invest in altcoin projects like Polkadot and Cardano.

And, India’s Polygon — an Ethereum based blockchain firm — also received a ‘sizable investment’ from billionaire Mark Cuban last month.

But, companies in the country only received 0.2% of the $5.5 billion invested in blockchain startups globally, according to a whitepaper published by think tank IndiaTech in May.

Firms like Polygon are built on public blockchain systems, like Ethereum, which will directly be affected if regulators crack down too hard on crypto.

However, even if you consider the fact that India’s crypto trading industry isn’t considered to be the most relevant in the global scheme of things, the data suggests that the overall industry is simply too big to fail now.

Too big to fail?

To be clear, a large part of the current global growth of $17 billion has come from a single deal, as pointed out by Bloomberg. Blockchain company Block. One struck a massive $10 billion funding round led by billionaires Peter Thiel, Alan Howard and Louis Bacon. However, it’s hard to ignore the fact that the crypto industry is slowly becoming too big to fail.

In April, many pointed out how Coinbase’s listing on the NASDAQ exchange could be the watershed moment for the industry. The world’s largest crypto exchange saw a massive $100 billion-plus initial public offering (IPO) on the exchange. It grew 31% in about a month after that, and though it has registered drops too, it brought investor interest to crypto and blockchain firms, unlike any previous iterations.

Around the same time as Coinbase’s successful listing, big money investment firm Tiger Global made a sizable investment in the Indian crypto exchange CoinSwitch Kuber. The company raised $25 billion in a Series B round that was led by Tiger Global.

The American investment firm’s interest raised CoinSwitch’s value to $500 million, putting it amongst the top exchanges in a country that is comparatively new to the industry, but a hub for blockchain development worldwide.

It’s about more than just the ‘monetary value’ of cryptocurrencies

Sure, countries would want to retain their monetary sovereignty, but cryptocurrencies aren’t your day-to-day assets either. Ether, the token that powers the Ethereum blockchain, gains from each new application that’s developed using its underlying technology.

According to the decentralized apps (Dapps) tracking platform State of Dapps, the Ethereum chain has been registering as many as 3,800 new apps per month. Decentralized apps include games, payments apps, social networks, and more that are built on blockchain platforms.

One could argue that 3,800 Dapps per month is a small number in the larger scheme of things, but that’s exactly the kind of thing that grows fast with investor interest. After all, Facebook was one among a few when it became big, but social media is without a doubt one of the biggest industries today.

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