Crypto Venture Capital Funding to Recover in 2025 Amid Regulatory Shifts: JPMorgan Report
Crypto venture capital (VC) funding is poised for a recovery in 2025, fueled by growing regulatory clarity and a more crypto-friendly environment under President Donald Trump’s administration, according to a report from JPMorgan (JPM) released on Wednesday.
The report notes that VC funding in the crypto sector has been subdued in recent years, largely due to regulatory uncertainties and enforcement actions taken by the U.S. Securities and Exchange Commission (SEC) during the previous administration. However, with the introduction of the EU’s Markets in Crypto Assets (MiCA) regulation in December, the report suggests that regulatory clarity will help boost VC activity in the sector.
Despite the expected recovery, JPMorgan cautioned that VC funding levels will likely not return to the peaks seen in 2021 and 2022, as traditional financial giants such as BlackRock (BLK) and Franklin Templeton are increasing their involvement in the crypto market. This shift may reduce the market share available to VC firms in areas such as decentralized finance (DeFi), stablecoins, and tokenization.
The report also highlights that emerging crypto projects are increasingly avoiding large-scale token sales to VCs and are instead turning to community-driven fundraising platforms. This trend indicates a shift in how new projects are raising capital, with less reliance on traditional venture capital funding.
Additionally, the rise of cryptocurrency exchange-traded funds (ETFs) has introduced a new dynamic to the market, attracting passive institutional investments that may divert capital away from VC firms.
While challenges remain, JPMorgan believes the combination of clearer regulations and growing institutional participation will help fuel a recovery in crypto VC funding in 2025, though not to the same levels seen during the market’s previous highs.
