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A study on the global digital securities ecosystem released yesterday by the Frankfurt School Blockchain Center and BlockState AG showed that 71 percent of investors in digital securities were traditional—not blockchain-specific—investors.
The blockchain industry, still awaiting investors from traditional finance backgrounds, is mistaken: they’re already here.
Who’s investing in crypto?
The study analysed 69 investors in the digital security ecosystem. It found that 64 percent of investors were “traditional” venture capitalist firms, and a further 8 percent were from investment funds, digital asset management firms, and real estate companies. Just 28 percent were from blockchain venture capital firms.
The USA remains dominant, accounting for 42 of the 69 investors. Germany was next, with six, before China, with five.
However, the blockchain industry might still be waiting on large traditional investors. The study found that investors in digital securities usually worked in smaller companies: 54 of the 69 investors were from companies with less than 50 employees. Just two of the companies surveyed were from companies with more than 200 employees.
The two companies with the largest number of investments were ZhenFund, a Chinese venture capital firm that has made 469 investments, and Slow Ventures, a US venture capital fund, which made 387 investments.
Yet it was blockchain VC funds who made the largest amount of security-token related investments: Blockchain Capital and Coinbase Ventures made three security token investments, and Andreseen Horowitz’s VC arm, a16z crypto, made two.
Old money, new technology
Banks, too, are interested in crypto. The most popular use case for the 17 banks surveyed was tokenization—a service used by 12 banks—followed by custody, which was used by five banks. The study found that nine banks have tokenized assets worth $1,573,300,000.
The survey found that the Chinese banks were “ahead of all others in terms of volume of tokenized assets,” a trend that’s likely to continue with the country’s renewed interest in blockchain following President Xi Jinping’s endorsement of the technology. The Chinese private Bank of Communications alone has tokenized $1,300,000,000.00 worth of debt; by comparison, the French Société Générale has tokenized a mere $110,000,000.
The most popular form of bank interested in crypto was the corporate bank (34 percent), followed by investment banks and state owned banks, each with 24 percent.
Despite the influx of old money into new technology, the report found that “The market is highly influenced by legislation.” For this reason, crypto-friendly nations, like Malta and Switzerland, are king.
The report also suggested that, because only six companies currently offer regulated trading solutions, secondary markets, like issuance, wallet, and custody services, “represent a major market gap.”