ACR #21: Boom or doom?
According to a report tagged ‘The African Blockchain Report’ published by blockchain venture capital company Crypto Valley VC in association with South Africa’s Standard Bank, crypto venture capital investment in Africa grew over 400% in 2022 to about $474 million, outperforming the global VC investment’s 4% growth of about $27 billion.
Seychelles and South Africa ($208 million and $176 million, respectively) secured 81% of African funding, while crypto exchanges and custody platforms claimed 52% of the money.
Also, fintech and blockchain infrastructure and development were the second and third-most funded categories. They accounted for 24% and 15% of the funds raised. Notably, the international crypto exchange KuCoin attained unicorn status, raising $180 million in Seychelles, and the number of blockchain deals in Africa grew by 12%.
Lastly, Africa’s share of $26.8 billion in global blockchain venture funding rose from 0.3% in 2021 to 1.8% in 2022.
What this means
Not much. KuCoin, which can be argued isn’t really an African startup, makes up more than one-third of the supposed venture investment into the continent. None of KuCoin's top executives is African, and most users aren’t.
African blockchain startups have not been enjoying a rosy ride. Apart from the series of layoffs experienced in the last six months, there have also been some African crypto companies shut down and takeovers.
Recall that Lazerpay, a crypto payments company, announced that it would close up less than two weeks ago after failing to close a successful funding round. Last year, the firm also could not raise money in a seed round after a key investor pulled out. Also, African-focused P2P crypto marketplace Paxful recently shuttered and suspended withdrawals amid key staff departures and the co-founders’ rift.
Away from that, a string of unclear regulatory stances, implicit and absolute bans have complicated crypto adoption and businesses on the continent.
Although crypto could be said not to be illegal in Nigeria, one of Africa's largest crypto markets, Nigerian banks are banned from participating in cryptocurrency transactions.
The Bank of Ghana, while categorizing cryptocurrencies as digital assets rather than currencies, is still working on a new framework, but it is yet to indicate when the framework will be ready.
Kenya’s regulatory sandbox set up by the Capital Markets Authority (CMA) to allow fintech innovators to test their products and services in live environments is simply a blocked pipeline for most crypto startups.
All in all, there’s still a huge funding and regulatory gap for blockchain startups in Africa, and there’s nothing to celebrate yet.
What else?
Roqqu receives regulatory approval to operate in South Africa
Roqqu has received regulatory approval to operate in South Africa, and its users will now be able to deposit and withdraw the South African Rand (ZAR) to and from their Roqqu wallets.
Nigerian tracking and monitoring health tech startup, Chekkit has raised an undisclosed round from Adaverse, a Cardano ecosystem accelerator, with participation from existing investors like RTA, HoaQ, Launch Africa, and Blockchain Founders Fund.
Yellow Card rewards "A Whole in Your Wallet" winner with 1 bitcoin
Yellow Card has announced and rewarded the winner of its “A Whole in your Wallet” global campaign with one bitcoin at an event in Lagos, Nigeria.
Blockchain Team Gluwa Proposes Nigerian Government Collaboration on Crypto Regulation
Global DeFi ecosystem Gluwa that delivers services of crypto lending, yield farming and investing in real-world assets has shared the details of its recent partnership with the Nigerian government.
3% of All Blockchain Developers Globally are in Africa, Reveals Latest Report
A report reveals that only 3% of all blockchain developers globally are in Africa. The number of monthly active Web3 developers increased by 5.4% to over 23,300 in the last year despite a nearly 70% decrease in cryptocurrency prices.
Product of the week
Afen Blockchain
AFEN blockchain is a Nigerian blockchain startup that is building an Africa NFT ecosystem to revolutionize sectors like arts, education and real estate. According to their website, their goal is to use blockchain technology to open up aspects of the African economy, create opportunities, and drive crypto adoption.
Personality Spotlight
Tola Odeyemi
Tola Odeyemi is the West Africa Government Affairs Lead at Binance, the largest crypto exchange in the world by trading volume.
What’s the meme?
What we are reading
Gridless Uses Bitcoin Mining to Power Rural Africa
Arthur Hayes: Market Makers Knew They’d Be Front-Run on FTX—It Was 'Common Knowledge'
That’s all for now. See you next week Monday!