Thread by @dantwany

The Block Research analyzed 123 cryptocurrency exchanges (spot and derivatives) that either cater to specific regions of the world or operate internationally.

theblockcrypto.com/genesis/85639/…

Three regions — specifically Asia, Europe, and North America — are the most catered-to areas for cryptocurrency exchanges, in which they make up roughly 69% of the businesses in aggregate

Since 2012, roughly $1.5 billion in venture funding has been allocated to cryptocurrency exchanges across 200 investment deals. North America has garnered the most funding or 47% of all venture funding.

Early on, new exchanges flooded the market, but each consecutive year, investment in early-stage exchanges dwindled. By 2018, just 2.4% were early-stage deals.

Investors instead opted to invest in exchanges that had formed a strong presence in the market and were in the process of raising later-stage deals. Others opted to focus on other areas of need, diverging from retail exchanges to institutional-focused products and services.

Twenty-four out of the 35 seed deals, or roughly 69%, occurred in 2016 or earlier. Since then, the majority (67%) of seed rounds have involved cryptocurrency exchanges that cater to developing regions (Africa, South America, the Middle East, and countries like India)

M&A activity for exchanges began to manifest in 2017. Roughly $1.1 billion has been spent over 15 deals involving the purchasing of a cryptocurrency exchange. When combined with venture funding, M&A activity made up 32.7% of investments in 2017, 62.1% in 2018, and 39.2% in 2019.

Year-to-date, the reported value of M&A deals has been nonexistent. Still, we expect the trend toward consolidation to continue. More exchanges in developing regions continue to mature and, in time, will be more lucrative to larger firms, similar to DCG's acquisition of Luno.

Digital Currency Group has been the most active investor in cryptocurrency exchanges, with 19 total investments. The firm’s portfolio consists of businesses across all seven regions, with Asia, North America, and South America drawing the most attention.

A special thanks to @Floating_Group for making this research available for free for everyone to read.