2022 will be a tumultuous year for the cryptocurrency space, with an ongoing bear market and high-profile collapses of some of the industry's biggest players like Terra and FTX. Despite setbacks, venture capital (VC) investors continue to show support for crypto startups.
VC investment in European crypto startups will hit an all-time high in 2022 with $5.7 billion invested, according to a new study published by European investment firm RockawayX
European decentralized finance startups to reach $1.2 billion in 2022, a 120% increase from the $534 million invested in the previous year. RockawayX CEO Viktor Fischer noted that the crypto market is cyclical. During the winter of 2018, “total digital asset market capitalization fell by 80%, but startup funding activity remained steady.”
"Investments made during a downturn in digital asset prices are reflected in technology and usage traction and 'bull market' price recovery." Europe is also home to the highest number of cryptocurrency startups (3,977) based on headquarters location. However, it trails the U.S. in the number of startups with more than $1 million in funding and unicorns valued at more than $1 billion.
Top global investors in European startups include Animoca Brands, Coinbase, Blockchain Capital and Digital Currency Group. In Europe, investments in startups providing financial services accounted for more than half (52%) of all investments, with infrastructure and Web3 accounting for 32% and 16% respectively. However, compared to 2021, investment in financial services-based start-ups fell by 19%, while infrastructure rose by 24%.
Europe is gaining prominence as a crypto-friendly region as EU lawmakers finalize the much-anticipated Markets in Crypto Assets (MiCA) regulation.
The regulation has been delayed twice by the EU due to translation problems. Laws passed by the EU must be translated into all 24 official languages of the member states. At the time of writing, the final vote on the MiCA rules is scheduled for April 2023.
