Investors Are Piling Into Crypto Startups—Just Not in China

For the first time in four years, venture investors are backing more crypto and blockchain startups in the U.S. than they are in Asia—a sign that China’s crackdown on alternative currencies has chilled the country’s upstart industry.

Though the country was once a crypto capital, China’s new restrictions on tech companies have driven down the number of cryptocurrency and blockchain startups getting funding, according to year-to-date data collected by research firm CB Insights. Beijing forbid crypto mining and banking operations this spring and then banned all transactions in September, forcing many founders to shutter operations or relocate.

“We’ve basically seen no deals in China,” said CB Insights analyst Chris Bendtsen. “In Asia, the companies are really based in Hong Kong, India and Singapore.”

But as China’s cryptocurrency and blockchain companies fade, in the rest of the world investment dollars have increased dramatically. The fourth quarter of 2021 is already the biggest ever for crypto startup investing, “and we’re not even into December,” Bendtsen said. Globally, the value of venture investments in the industry surged from $3.1 billion in 2020 to $21.3 billion through Nov. 30—a more than sixfold increase.

The number of deals in China fell by more than half from 2020, to 41 so far this year. Meanwhile, the total value of funding to crypto and blockchain startups in the country also fell by about a third to $214 million. In the U.S., it climbed more than sevenfold to $10.9 billion across 417 deals.