US-based blockchain investments in the first half of this year already exceed the annual total of 2017, according to KPMG’s biannual fintech investment analysis report, ‘The Pulse of Fintech 2018’.
While the company didn’t report on specific figures, the statement is sufficient to highlight the mass growth of interest in the technology, and follows recent predictions from the International Data Corporation (IDC) that the blockchain industry will see a compound annual growth rate of 73% on the run up to 2022.
KPMG says the bulk of this investment was led by funding rounds in excess of $100m by banking startup consortium R3 and Circle Internet Finance, while other “significant” deals included Paxos’ $65 million Series B raise aimed at helping it scale operations for delivery of its blockchain platform.
The report puts much of this funding growth down to “widespread applicability” in helping harness efficiencies with financial institutions.
“There’s more VC [venture capital] flow available than opportunities to invest – a sign of tremendous growth in the space,” said Safwan Zaheer, director of financial services digital & US fintech lead KPMG US.
“Blockchain has the potential to transform banking and if banking systems were to be rewritten today they would be based on blockchain.” – Safwan Zaheer Director, Financial Services Digital & US Fintech Lead KPMG in the US,” he added.
The financial sector is set to spend $552m (£420m) in 2018 on a global scale which puts it well ahead of any other industry (IDC). Most popular use cases here include cross-border payments, lot and lineage provenance, and trade finance & transaction settlements.
While KPMG laudes the technology’s potential in finance – from recordkeeping and the registration of transactions to documentation management and supply-chain management – it adds that these attributes would enhance the process of “any number of US and global businesses”.
On this point, the report notes that new consortia outside of finance have “continued to crop up”, particularly in the realms of supply-chain management, while ICOs (initial coin offerings) have continued to gain global interest – despite bans by countries such as China – Block.one raising $4bn at the start of the year in the Cayman Islands.
Regions to watch for the technology’s continued growth, according to KPMG international’s global lead of blockchain, Eamonn Maguire, include Southeast Asia and the Middle East, which are fast becoming “very significant” for the technology’s development.
“The cultural ecosystem, economy, and many governments are focused on driving blockchain development [within Southeast Asia].
“This holistic innovation effort is also evident in the Middle East, where governments are playing a significant role in innovating and stimulating their economies through the economic development associated with technology,” added Maguire.
“In other regions, government adopts a more neutral approach where innovation is driven directly by the commercial sector.”
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