China's blockchain sector is accelerating. The government just documented 249 investment deals in blockchain startups on the books, with capital pouring in at record pace. A whitepaper from China's M
China's blockchain sector is accelerating. The government just documented 249 investment deals in blockchain startups on the books, with capital pouring in at record pace.
A whitepaper from China's Ministry of Industry and Information Technology dropped on May 20, laying out the numbers. In 2016, blockchain companies pulled in 60 funding rounds, up five-fold from the prior year. Last year, 2017, investors backed close to 100 deals. Now, in just the first quarter of 2018, 68 new funding rounds have closed, suggesting momentum won't ease.
The number of blockchain startups tells a similar story. At the end of 2016, China had 256 blockchain companies. By March 2018, that count hit 456. The annual cohort of new startups jumped from 45 in 2014 to 136 in 2016 and 178 in 2017.
"The industry is developing rapidly with more and more entrepreneurs and capital entering the market," the whitepaper notes.
Most of these startups, 295 of them, are building blockchain applications. Another 109 focus on real-economy use cases. Financial services outfits account for 86 companies. Four major cities dominate the landscape: Beijing, Shanghai, Guangdong, and Zhejiang host 80% of all Chinese blockchain firms.
China's tech giants aren't sitting on the sidelines. Tencent built TrustSQL, an enterprise blockchain platform. Alibaba is putting blockchain into nonprofits, supply chain traceability, rental services, and insurance. Baidu partnered on China's first blockchain-backed asset securitization deal and launched a blockchain-based ABS exchange. JD.com is using the technology to track supply chains and verify product authenticity.
The whitepaper arrived days after the CCID published a monthly index ranking 28 cryptocurrencies and the blockchains backing them. Ethereum took the top spot. Bitcoin placed 13th.
The government is tightening policy elsewhere. China has banned ICOs and shut down all domestic cryptocurrency exchanges and trading websites, including foreign platforms. Beijing set standards for the technology and promised to release national blockchain guidelines by the end of 2019, covering technical basics, business applications, and security.
But the crackdown hasn't killed state appetite for blockchain. Hangzhou, home to Alibaba, announced it would funnel 10 billion yuan, about $1.6 billion, into a blockchain fund backing blockchain ventures.
