In the global fintech market downturn of 2023, blockchain and crypto-based businesses managed to capture the lion’s share of investments in several key European markets. The “State of European FinTech” report generated by the Amsterdam-based venture fund Finch Capital illustrates an interesting pattern within the ongoing financial turbulence. While the Europe, Middle East, and Africa (EMEA) region experienced a 50% dip in fintech investments in the first half of 2023, the crypto sector showed a noteworthy increase in investments.
Investments in this sector dropped from $27.3 billion in the first half of 2022 to $11.2 billion in the same period in 2023. However, in the UK, the blockchain and crypto sector took 28% of all fintech deals in H1 2023. In the Netherlands, this number jumped to 35%, while in Germany and France, crypto investments made up 27% and 29% respectively. Hence, the crypto industry found a silver lining in the greater fintech slowdown storm.
However, crypto’s success is locked in a tug-of-war with the traditional lending sector, which remained dominant in Ireland and across the EMEA region in terms of deal volume. It casts a shadow on the crypto boom, nudging us to question if the surge in crypto investments is a genuine upswing or only a short-lived consequence of the broader fintech investments slump.
In the backdrop of the seemingly gloomy fintech scenario, the investor sentiment in the digital economy holds strong. As per a recent report, 24% of asset management firms have adopted a digital assets strategy. Furthermore, an extra 13% are planning to do so within the next two years. These data points strengthen the prospects of the crypto economy.
Highlighting one such significant gain, the European digital asset manager CoinShares generated a total revenue of 20.3 million pounds ($25.9 million) in Q2 2023, a 33% spike compared to the same period in the preceding year.
While the crypto sector claims a larger slice of the fintech investment pie in the current economic climate, the competition with conventional lending sector remains fierce. With newer strategies being adopted by asset management firms and digital economies showing promise, the journey ahead for crypto and blockchain businesses is awash with both opportunity and challenge. The main question now is whether the gains made in 2023 can be sustained and built upon in the years to come.
Source: Cointelegraph
