Crypto Was Singapore's Top Area of Fintech Investment in 2022 Despite Global Slowdown: KPMG
For 2023, KPMG has predicted that it is "likely investments in crypto-focused firms will remain very slow."
Crypto or Blockchain was the top area of fintech investment in Singapore in 2022 despite the global slowdown in the space, according to the KPMG Pulse of Fintech report for the second half of 2022.
This is despite the finding of a key trend that investors are shifting to noncrypto-based solutions in the wake of the crypto contagion in 2022. The second half of 2022 saw a "particularly noticeable" decline as investors digested the falls of Terra, Three Arrows Capital and FTX, KPMG's findings said.
In Singapore, crypto-related funding fell by 21% from $1.5 billion in 2021 to $1.2 billion in 2022. Globally, investments in the space fell from $30 billion in 2021 to $23.1 billion in 2022.
"The variance between the first half of the year and the second highlights the rapid shift in investor sentiment," said Anton Ruddenklau, global head of Financial Services Innovation and Fintech, KPMG International. "But the news wasn't all negative. Regtech, in particular, saw incredible investment in 2022."
The Regtech space attracted a new high of $18.6 billion in investment, well above the previous record of $12.1 billion seen in 2021. The report said this growth is aimed at ensuring that such digital or crypto-related transactions are accurate, transparent, reliable and compliant.
For 2023, KPMG has predicted that it is "likely investments in crypto-focused firms will remain very slow" and a potential shift "in investment to jurisdictions with stronger regulatory frameworks for crypto activities."
One trend from 2022 is expected to grow in 2023 – the shift of investors from blockchain companies focused on the retail market to startups focused on providing solutions for the SME market.
"While investment in crypto is expected to be particularly weak in H1 '23 ... the broader area of blockchain-based solutions – including institutional use cases, cross-border payments, gaming, and NFTs – will likely gain additional attention from investors."
The report also reflected a trend that the fintech sector is expanding access to a broader base of investors by giving the example of the $300 million raise by Singapore-based crypto firm Amber which was the second largest wealth-tech deal of the year.
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