Crypto Investments Seem Less Vulnerable to US-China Tensions

With U.S.-China tensions continuing to burn, some investors are feeling the heat.

Friction between the world’s two largest economies has taken a toll on venture funds investing in non-crypto startups. Investment in the blockchain industry, however, may be less affected. Crypto companies’ unique fundraising processes and decentralized nature provide some protection from geopolitical risks, according to China-focused crypto and blockchain investors.

The Trump administration recently sanctioned Chinese officials because of Hong Kong’s new security law. Separately, the U.S. warned the global community against using Chinese technology and tried to force Chinese companies to sell parts of their business. Other western countries are beginning to follow suit. China has kicked out major American media outlets and closed the U.S. Consulate in Chengdu.

China-focused venture funds have seen low capital inflow due to investment restrictions on U.S. pension funds, while Chinese companies will have to go through a more rigorous vetting process if they wish to go public on Nasdaq or New York Stock Exchange in the U.S. This tightening comes on top of the COVID-19 pandemic, which has already taken a toll on cross-border investment.

Six U.S.-dollar funds with investments in China have looked to raise capital this year compared to 21 last year. The State Department has asked U.S. universities and colleges to divest their Chinese holdings due to stricter scrutiny from the Trump administration and potential delisting of all Chinese companies on U.S. exchanges. The warning came on the heels of a ban on Chinese short-video platform Tik Tok and Tencent’s messaging app WeChat.

While it is difficult to obtain comprehensive data on the scope of U.S.-China crypto investment, there have recently been a few notable deals. Jump Trading, a U.S.-based security and cryptocurrency market maker for Robinhood, announced Thursday it would invest in decentralized exchange Serum, which…

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