In a recent interview at the Collision Conference in Toronto, Animoca Brands CEO Yat Siu shed light on the contrasting environments for crypto businesses worldwide. While Web3 startups are flourishing in Asia and the Middle East, North American entrepreneurs face challenges stemming from macroeconomic and regulatory conditions.
Siu emphasized that despite the obstacles, the situation is not as dire as it may seem. Although crypto firms in North America are grappling with higher interest rates and a downturn in crypto asset prices, venture funding is still available for Web3 startups. However, these companies now face stricter criteria due to the changed landscape.
Siu pointed out that while valuations have decreased, there has been a steady increase in the number of builders entering the space, the deployment of smart contracts, and the growing user base. He expressed optimism about the industry’s future and highlighted Animoca’s significant portfolio growth of nearly 60 investments in recent months.
However, the overall strength of the crypto space has declined compared to previous years. According to PitchBook’s Crypto Report for Q1 2023, crypto companies raised $2.6 billion across 353 investment rounds, indicating an 11% decrease in deal value quarter-over-quarter and a 12.2% decrease in total deal value.
Siu’s comments come in the wake of major developments impacting the crypto industry, such as the crackdown by the U.S. Securities and Exchange Commission (SEC) on crypto firms and the implementation of licensing systems in Hong Kong and the United Kingdom to regulate digital asset markets and mitigate associated risks.
The CEO noted that the regulatory aspect has instilled fear and uncertainty among Web3 companies, particularly in North America. Siu believes that the differing approaches taken by countries reflect their agendas for emerging technologies. While Asian nations provide favorable environments for crypto businesses, the U.S. has taken a more cautious stance due to political reasons, resulting in other regions of the world flourishing as crypto ecosystems.
In conclusion, the article highlights the challenges faced by North American crypto VC firms amid tough macroeconomic and regulatory conditions. It contrasts this with the thriving crypto landscapes in Asia and the Middle East. The differing approaches reflect each country’s agenda for emerging technologies, potentially allowing for new ecosystems to flourish globally.