US Leads Global Crypto Startup Funding in Q2, Report Finds

Despite facing regulatory scrutiny, crypto firms in the United States continue to attract significant funding, with nearly half of all capital investments flowing into US-based crypto startups, according to a recent report published by Galaxy Digital, a crypto investment firm.

The report highlights that US-based crypto startups accounted for over 43% of all completed deals and raised more than 45% of the capital invested by venture capital (VC) firms. The United Kingdom secured 7.7% of the capital investment, while Singapore and South Korea attracted 5.7% and 5.4% respectively.

However, the report also notes a decline in the total amount of capital invested in crypto and blockchain startups on a quarterly basis. Only $720 million was raised by 10 new crypto VC funds in Q2 2023, the lowest amount since the beginning of the COVID-19 pandemic in Q3 2020. Additionally, the report points out that crypto and blockchain startups raised less money in the last three quarters combined than they did in Q2 of the previous year.

While the “broad Web3 category” witnessed more deals, it was the “trading category” that raised more capital, indicating the diverse areas of focus within the crypto startup ecosystem.

The findings of the report come at a time when the United States Securities and Exchange Commission (SEC) has been taking action against various US crypto firms. The recent partial ruling in the SEC vs. Ripple Labs case, declaring that XRP is not a security when sold on digital asset exchanges, has been seen as a significant development in the industry. Ripple CEO Brad Garlinghouse has criticized the SEC’s approach, accusing them of stifling innovation and the crypto industry in the US.

In addition, the SEC’s actions against major crypto exchanges Binance and Coinbase on allegations of securities law violations and offering unregistered securities have raised concerns within the industry. Despite these challenges, the US remains a dominant player in crypto startup funding, attracting substantial investments from VC firms.

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