Cryptocurrency Venture Capital Grows 400% in Africa Despite the Bear Market

Venture capital investment in cryptocurrency grew by more than 400% in Africa in 2022 to around $470 million, outpacing global venture capital investment growth of 4% that saw the industry take in around $27 billion.

According to a new report from South Africa’s CV VC and Standard Bank, African crypto companies raised about $474 million in 2022, outpacing investment in other sectors by nearly 400% and outperforming global crypto investment growth by 4%.

Africa’s share of global crypto capital investment jumps to 1.8%

Seychelles and South Africa took 81% of the African funding, winning $208m and $176m. Exchanges and custodians accounted for 52% of the funds.

Meanwhile, infrastructure, fintech development, and blockchain were the second and third most funded, accounting for 24% and 15% of the funds raised, respectively. KuCoin International Exchange has reached unicorn status, raising $180 million in the Seychelles.

In addition, the number of blockchain transactions grew by 12%, including companies involved in personal identification and financial independence.

Africa’s share of $26.8 billion in financing global blockchain projects increased from 0.3% in 2021 to 1.8% in 2022.

Blockchain Project Funding by Region | source: CV VC AFRICA BLOCKCHAIN ​​REPORT 2022

Despite the growth, most crypto capital funding remains concentrated in the United States (57%), Asia (17.7%), and Europe (18.2%). The United States will shed 10% of its annual share of sector-neutral venture capital funding to Asia in 2022.

Devalued currencies and regulatory uncertainty ahead

Although crypto venture capital is growing in Africa, Bloomberg a report Earlier this year, he revealed that faltering growth and currency depreciation in most developed African economies may be constraining financing for African startups. These economies include Kenya, South Africa, Egypt and Nigeria.

Lazerpay, a B2B crypto payments company, recently announce Store will close after failing to close a successful funding round. Last year, the company was also unable to raise money in an initial round after a major investor pulled out.

A mixture of regulations and implicit and outright bans have complicated cryptocurrency adoption in African countries.

While cryptocurrency is not illegal in Nigeria, its banks are prohibited from engaging in cryptocurrency transactions. The Nigerian Securities and Exchange Supervisory Authority, the Nigerian Securities and Exchange Commission, will formalize new crypto rules in its upcoming Finance Bill.

While the Bank of Ghana classifies cryptocurrencies as digital assets rather than currencies, it is still working on a new framework. The bank has not yet specified when the framework will be ready.

Africa-focused P2P crypto marketplace, Paxful, recently suspended withdrawals amid departures of key employees. The platform was popular in Nigeria and Ghana.

Recently, the Reserve Bank of South Africa implicitly issued guidelines to legalize cryptocurrencies. Kenya recognizes crypto assets as securities, while Seychelles only requires compliance with AML/CFT rules.

For a recent Be (In) Crypto Bitcoin (BTC) analysis, click here.


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