In brief A new report from CB Insights found that VC-backed deals in the crypto and blockchain sector have moved from the US to China over the past year.

The news follows Chinese President Xi Jinping’s endorsement of blockchain technology late last year.

One factor behind the shift could be a decline in enterprise blockchain funding, given that many enterprise blockchain companies are base in the US.

Deals in the crypto and blockchain sector have shifted from the US to China over the past year, according to a new report by CB Insights.

The Blockchain Report 2020 revealed that in 2016, over half (51%) of VC-backed deals in the sector were for US-based companies, with only 2% going to those based in China. In 2019, the US’ share of deals fell to 31% and China’s rose to 22%.

The increase in blockchain-related deals in Asia follows Chinese President Xi Jinping’s endorsement of blockchain technology in October 2019, and subsequent efforts to boost blockchain across state media. The news was a marked reversal of China’s previous stance on the technology; ever since China prohibited crypto trading in September 2017, the local cryptocurrency industry had struggled to obtain funding and move forward with commercialization of blockchain technology.

CB Insights’ findings come hot on the heels of a report from Rhino data, which found that Chinese blockchain startups received $3.5 billion in funding last year. A report last month from the International Data Corporation predicted that by 2023, Chinese companies will have invested $2.7 billion into blockchain technology.

Enterprise blockchain funding down

Although China’s blockchain industry appears to be booming, globally the enterprise blockchain market has struggled to find funding. CB Insights found that funding for crypto and blockchain companies in 2019 fell sharply, and investments in the enterprise blockchain market especially slowed down.

“Enterprise blockchain funding has lagged. Efforts to reduce back-office costs and improve business processes are still ongoing. However, funding to other applications has been nearly 7x higher than to enterprise blockchain over the past 5 years,” the researchers wrote.

The declining appetite for enterprise blockchains from investors coincides with a shift in deals from the US to China, with most leading enterprise blockchain companies, such as R3, Hyperledger and IBM, being based in the US.