Crypto Venture Capital Funding to Recover in 2025, But 2021/22 Peaks Unlikely: JPMorgan

Crypto venture capital (VC) funding is poised for a recovery in 2025, driven by a more favorable regulatory landscape and pro-crypto policies under President Donald Trump, according to a new report by JPMorgan (JPM) released Wednesday.

The report highlighted that the past few years saw a decline in venture capital funding, largely due to regulatory uncertainty and enforcement actions by the U.S. Securities and Exchange Commission (SEC) during the previous administration. However, the current political shift is expected to boost investor confidence, encouraging more funding for crypto startups.

The European Union’s Markets in Crypto Assets (MiCA) regulations, which came into effect in December, are also expected to strengthen VC activity, providing clearer guidelines for investors and startups alike.

While the outlook is positive, JPMorgan noted that VC funding is unlikely to return to the record highs observed in 2021 and 2022, as traditional financial giants, such as BlackRock (BLK) and Franklin Templeton, continue to capture a larger share of the market. These firms have increasingly entered the crypto space, investing heavily in stablecoins, decentralized finance (DeFi), and tokenization.

Additionally, many emerging crypto projects are moving away from large-scale token sales in favor of community-driven platforms, which could further limit VC involvement in early-stage financing.

The report also pointed out that higher interest rates and the growing popularity of cryptocurrency exchange-traded funds (ETFs) could further hinder venture capital flows, as ETFs provide passive investment options that are drawing capital away from more active VC investments.

Despite these challenges, JPMorgan remains cautiously optimistic about the future of crypto venture capital, expecting a gradual recovery as regulatory clarity improves and institutional adoption of digital assets continues to grow.