Animoca Brands CEO: Struggling North American Crypto VC Market

The Global Imbalance of Crypto Space

The CEO of Animoca Brands, Yat Siu, has noted that the crypto space has been in a state of imbalance around the globe, with Web3 startups thriving in the Middle East and Asia, while crypto entrepreneurs in North America have been facing difficulties due to the challenging macroeconomic and regulatory environment.

At the Collision Conference in Toronto, Siu spoke to Cointelegraph and pointed out the main distinctions between the atmosphere for crypto companies globally, emphasizing that it is not “as bad as it appears”.

He stated that while Web3 startups can still obtain funding from venture firms, the current economic situation with higher interest rates and a decline in crypto asset prices has made it more difficult for new companies to do so.

Valuations have certainly decreased, however the number of developers joining the sector, the amount of smart contracts being implemented, and the amount of participants still growing, has been encouraging. He further commented that Animoca had included almost 60 investments to their collection in the recent months, expressing that they remain very optimistic.

Despite being active, the crypto space isn’t as robust as it used to be. According to the most recent PitchBook Crypto Report for Q1 2023, crypto companies managed to raise $2.6 billion through 353 investment rounds. However, the deal value decreased by 11% QoQ and total deal value decreased by 12.2%.

The Regulatory Environment for Crypto Companies

Following the dramatic collapse of FTX in November 2022, Siu’s comments have come in the wake of significant occurrences in the crypto sector. In the US, for example, the Securities and Exchange Commission initiated a crackdown on crypto companies in an effort to control the industry using enforcement measures.

In comparison, Hong Kong has put into place a licensing system for crypto businesses in order to reduce the risks related to the digital asset markets. The United Kingdom took a comparable path, passing a law that gives regulators the authority to introduce and enforce regulations for crypto businesses.

If you look at crypto VC from a North American point of view, it may seem unfavorable. Siu remarked that in the Middle East and Asia, it is actually very active. He also said that the regulatory aspect has been a “hammer” on Web3 companies, causing much anxiety since people don’t know what is happening.

The Positive Side of the US’ Negative Stance

The experienced crypto entrepreneur does not think it is a coincidence that different countries have taken varying approaches to the industry. According to Siu, the positive attitudes of Asian countries and the negative stances of the U.S. are part of their respective plans for emerging technology.

Promoting Web3 as a concept is also about the national interest beyond that of the end user for self-sovereign identity. The US is doing a service to the world. Unfortunately, due to political reasons, the US is leaving the responsibility to other countries. Nevertheless, the positive side is that it allows for the emergence of ecosystems that could not exist before.

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