The crypto market has experienced considerable volatility since last year. We explore how the top banks have been investing in the blockchain space during that time and what use cases are seeing the most investments.
In August 2021, we highlighted how 55% of the top 100 banks (by assets under management, AUM) invested in companies operating in the blockchain and/or digital currency spaces, either directly or through subsidiaries. Since then, the crypto blockchain market has experienced considerable levels of volatility, prompting us to revisit the investment activity of the banks we tracked and see what they’ve been investing from August 2021 to May 2022.
Around 23 banks have made at least one investment in blockchain/crypto-linked entities in the cycle from August 2021 to May 2022 that we cover in this edition of our updated analysis. Of these transactions we tracked down, 6 involved new investors with first-time deals in the ecosystem, whereas the rest featured returning investors such as Morgan Stanley, BNY Mellon, and Goldman Sachs.
In this current cycle, the most active investors based on the number of investments in blockchain companies are KB Financial Group (8), United Overseas Bank (7), Citigroup (6), Goldman Sachs (5), and Commonwealth Bank of Australia (4). Please note the total deals take into account any investments made by the above organizations as well as subsidiaries and corporate venture arm.
In most cases, we cannot determine how much money these banks have invested, as they participate in funding rounds with multiple or many other investors.
As a proxy of this, we can look at the total funding amounts of the rounds they participated in. Based on this, the investors active in the biggest funding rounds are Morgan Stanley ($1,100M in 2 rounds), Goldman Sachs ($698M in 5 rounds), BNY Mellon ($690M in 3 rounds), Commonwealth Bank of Australia ($421M in 4 rounds), and Citigroup ($215M in 6 rounds).
As of May 2022, a total of 61 banks (55 in previous update + 6 new investors in the current cycle) now have invested at least once in this space. Therefore, the proportion of banks that stay invested in the ecosystem and the gradual entry of new investors indicate a stable outlook and is expected to drive more investment participation from banks in the near future.
Where banks are investing the most
Custody solutions and technology providers
Custody solutions and technology providers, as expected, maintain their popularity among the top banks, having raised some of the largest funding rounds since August 2021. These deals include: NYDIG ($1B), Fireblocks ($550M), Gemini ($400M), and Anchorage Digital ($350M).
This came as no surprise as the market cap value of cryptocurrencies grew to an all-time high in Nov 2021, resulting in more demand and amount of digital assets held by custody providers. Since the beginning of 2019, assets under custody (AuC) have grown an impressive ~600%.
In fact, custody and technology solution providers raised mega-rounds ($100M & up) from banks which included:
- Morgan Stanley – made follow-on investment in NYDIG’s $1B Growth Equity round
- BNY Mellon – follow-on investment in Fireblock’s $550M Series E
- Commonwealth Bank of Australia – participated in Gemini’s $400M Series A
- GS Growth – invested in Anchorage Digital’s $350M Series C