The United Kingdom’s crypto and fintech industries saw investment dry up in the latter half of 2022 amid a combination of turbulent macroeconomic conditions and record-high inflation.
Businesses in the region completed a total of 591 fintech deals in 2022, compared to 724 in 2021.
The Fintech Trajectory
According to Bloomberg, the data comes from a report published Wednesday by the big four accounting firm, KPMG. Its numbers show a $22 billion drop in Fintech investment in 2022 down to just $17 billion – a 60% decline.
“The variance highlights the shift in investor sentiment in the face of increasing geopolitical challenges leading to the lack of IPO exits, the downward pressure on valuations, and market turbulence,” said.
The drop mirrors the roughly equivalent drop in the total cryptocurrency market cap within that time, from over $3 trillion in November 2021 to under $800 billion in December 2022.
Fintech investment also seemed to dry up precisely as crypto entered free fall last year. Karim Haji, a partner at KPMG, said the first half of the year saw far more investment deals than the second half.
“The variance highlights the shift in investor sentiment in the face of increasing geopolitical challenges leading to the lack of IPO exits, the downward pressure on valuations, and market turbulence,” he said.
Meanwhile, many of crypto’s greatest blowups like Celsius, Voyager, and Terra emerged mid-year, leading up to FTX’s infamous meltdown in November.
The largest draw among the UK’s fintech subsectors were payment firms, which absorbed $3.6 billion of investments last year.
Worldwide, fintech firms reaped $164.1 billion across over 6000 investment deals last year, versus $238.9 billion in 2021.
Crypto and Defi’s Trajectory
Naturally, investments in crypto and blockchain-specific firms also fell, from 30 billion in 2021 to $23.1 billion in 2022. Meanwhile, value locked within Defi protocols has plummeted to $50 billion, down from $180 billion at its high.
A report from Pantera Capital published last month shows that VC investment in crypto firms fell by over 75% between Q4 2021 and Q4 2022.