Despite the recent meltdown of the crypto market, the African blockchain scene has continued to attract significant funding, with venture capitalists (VCs) still betting on the sector’s future.
During the first half of 2022, African blockchain companies attracted $304 million in funding, almost triple the $127 million received in 2021, Nation reported on August 3.
In the first three months, VCs pumped $91 million into various companies, growing 134% in the second quarter to $213 million. Interestingly, during the second quarter, the crypto market recorded one of its worst returns, led by assets such as Bitcoin (BTC), which plunged 56% over the three months.
KuCoin leads in funding
Some leading funding rounds saw Seychelles-based cryptocurrency exchange KuCoin raise a record $150 million. The funding was dubbed Africa’s first blockchain ‘mega-deal’.
In addition, pan-African crypto exchange Mara raised $23 million, while startup Jambo raised $30 million. Elsewhere, Nigerian startup Afriex raised $10 million during the second quarter.
Despite record funding, Africa only accounted for 0.5% of blockchain foundings globally in the first six months of 2022.
This comes after the African Blockchain Report noted that the continent’s crypto sector is mainly driven by the region’s economic challenges such as rising inflation and the devaluation of local currencies.
“The lack of common legacy financial systems and a huge, primarily unbanked population all contribute to the popularity and growth of cryptocurrencies on the continent,” the report said.
Increased use of cryptocurrencies in Africa
Overall, several African countries are witnessing increased crypto adoption as citizens aim to integrate digital assets into their normal financial engagements. As reported by Finbold on August 3, Nigeria ranks as the most cryptocurrency-obsessed country globally, with a Google trend search score of 371.
Despite the recent market meltdown, investors are showing interest in digital assets betting on a possible rally in the future.
Following the concentration of crypto investors in Africa, most countries still have a vague regulatory approach. Along these lines, countries such as South Africa have announced plans to regulate and integrate the sector into the mainstream financial system.