Crypto VC Funding Expected to Rebound in 2025 Amid Favorable Policies: JPMorgan
Crypto venture capital (VC) funding is poised for a recovery this year as regulatory clarity improves and crypto-friendly policies take shape under President Donald Trump’s administration, JPMorgan (JPM) said in a research report on Wednesday.
The bank highlighted that VC funding for the crypto industry has been subdued in recent years, largely due to enforcement actions by the U.S. Securities and Exchange Commission (SEC) and the uncertainty surrounding regulations during the previous administration, analysts led by Nikolaos Panigirtzoglou noted.
The implementation of the EU’s Markets in Crypto Assets (MiCA) regulations, which took effect in December, is expected to further encourage VC activity, the report added.
However, JPMorgan cautioned that funding levels are unlikely to return to the peaks of 2021 and 2022 due to several challenges.
Traditional financial institutions such as BlackRock (BLK) and Franklin Templeton are increasing their footprint in the crypto market, capturing market share in areas like stablecoins, tokenization, and decentralized finance (DeFi), which may limit opportunities for VC firms.
Additionally, emerging crypto projects are increasingly bypassing large token sales to VCs, opting instead for community-driven platforms to raise capital, the report noted.
High interest rates present another hurdle, making funding more expensive and potentially deterring investments.
The growing popularity of cryptocurrency exchange-traded fund (ETF) products is also shifting investor preferences towards passive strategies, which could divert capital away from VC firms, the report said.
Despite these challenges, JPMorgan expects a more favorable environment for venture funding as the industry benefits from improved regulatory clarity and the growing integration of digital assets into mainstream finance.
