In March, just as Bitcoin reached an all-time high price, the NFT market lagged behind.
Monthly sales volumes for NFTs totaled approximately $1.4 billion, a steep drop from a high of about $6 billion in January 2022, according to data from CryptoSlam.
Yat Siu, chairman of Animoca Brands, one the biggest investors in Web3 startups, isn’t worried. In an interview with Decrypt during Paris Blockchain Week, Siu said that he’s still invested—literally and figuratively—in the future of NFTs and the metaverse.
“I think it's going to go up,” he said about yearly sales volume for the NFT market. And like he told Rug Radio’s FOMO Hour in February, he believes that gaming will be a big driver of the space's growth.
“Gaming as an ecosystem is actually perhaps the most powerful when it comes to creating more mass adoption, as you move people from Web2 to Web3,” he added.
At Paris Blockchain Week, Siu, whose company owns or has invested in a slew of Web3 gaming companies and other crypto projects, also spoke with Decrypt about the regulatory elephant in the room—the U.S. Securities and Exchange Commission—as well as his company’s financials in 2023 and projections for the current year.
SEC and crypto flight
Animoca isn’t based in the U.S. Its headquarters is in Hong Kong, and it’s registered in Australia. However, that hasn’t kept the Web3 conglomerate out of the SEC’s sightline. In its lawsuits against Binance and Coinbase in June 2023, the regulatory agency claimed that SAND, the token that powers the metaverse game The Sandbox, was a security.
Animoca Brands owns The Sandbox, and Siu told Decrypt that the SEC never requested or subpoenaed information from the company about its token before or after the two lawsuits were filed. This is surprising, given that the SEC’s case against Coinbase hinges on whether SAND and a slew of other singled-out cryptocurrencies are unregistered securities.
“Our industry perspective is that we think the SEC is very aggressive,” said Siu.
And that’s why he believes the U.S. may have fallen behind the rest of the world—particularly Asia—in Web3. “Everyone wants to move to the Bay Area,” he said of the broader tech world. “And for our industry, people are looking to leave.”
Valuations down, tokens up
In 2023, crypto was down—and down big. Unsurprisingly, Siu said that valuations for the crop of companies Animoca has invested in were also down for 2023 compared to 2022. However, beginning especially in early 2024, the value of Animoca’s token holdings have increased, he said. “The equity will catch up later on,” he added.
Animoca was once publicly traded in Australia, and given that a significant number of investors still hold equity in the company, the company is required to release periodic financial reports. The aggregate value of its cash, cryptocurrencies, and token reserves decreased from $2.26 billion in December 2022 to $2.1 billion in November 2023.
Despite the slight financial downswing, Siu seemed energized. During the interview with Decrypt, he cracked open a sugar-free Red Bull and took a sip.
“I think millions and millions of more people,” he said, “are going to join Web3.”
Edited by Andrew Hayward