Original Article Title: The State of Crypto Venture Capital in 2025

Original Article Author: Paul Veradittakit, Partner at Pantera Capital

Original Article Translation: Luffy, Foresight News

Summary

· Since the beginning of this year, cryptocurrency companies have raised over $16 billion in funding and seen over 100 M&A deals. The industry is currently moving towards a record-setting trajectory, with transaction volumes surpassing the full-year levels of 2024.

· Driven by increased regulatory transparency in the United States and global growth momentum, the foundation of this cycle is more robust.

· The wave of strategic M&A and IPOs will continue into the next cycle.

In 2025, record-breaking M&A and IPO activities are reshaping and driving the upgrade of the crypto industry, attracting new capital, institutions, developers, and users, injecting momentum into blockchain innovation and applications. This pattern has also occurred in other major technological revolutions: after decades of infrastructure development, there is often an explosive growth phase. The rise of artificial intelligence benefited from decades of infrastructure investment, but the speed at which the crypto industry is maturing is much faster, relying on a more advanced technology stack and being able to leverage higher-quality tools to achieve compounding development. It is for this reason that the intrinsic dynamics of the current market are fundamentally different from previous cycles: no longer driven mainly by speculative trading but more reliant on strategic integrations driving progress.

Accelerating Development Trends: What Sets This Cycle Apart

The trends in the crypto market have seen fluctuating waves akin to a sine curve. Despite the slowdown in venture capital growth, deep-seated industry activities are actually showing a bullish trend due to factors such as regulatory tailwinds, government's crypto-friendly attitudes, active trading flows, increased investments in crypto businesses by companies like Robinhood, and deepening cross-sector integration between crypto and adjacent industries.

After reaching its peak in 2022, capital inflows in 2023 saw a significant decline, started to recover in 2024, and then experienced a significant acceleration in 2025: in just the second quarter of 2025, there were 31 transactions with amounts exceeding $50 million, with late-stage funding like IPOs, mergers and acquisitions, and debt financing becoming the growth drivers. Since the beginning of the year, the crypto market has attracted $16.1 billion in capital, but crypto venture capital is now mimicking the traditional venture capital model: capital is concentrated in a few funds. Capital concentration typically leads to larger individual investment amounts but fewer total transactions, reflecting the progression of many crypto companies towards a growth phase and signaling that the current funding environment is more competitive than ever for both founders and investors.

The unique characteristics of this current cycle are a combination of factors: token price recovery, continuous launch of new products, founders' increased confidence in the industry, and favorable regulations providing clarity for stablecoins and digital assets, all of which have unlocked more capital for the industry. Over the past few years, regulatory ambiguity has created friction between innovators and the Web3 space, as all parties were concerned about potential regulatory risks. The Trump administration's friendly approach to the crypto industry, through the Talent Act and the Clarity Act, laid a legislative foundation for the implementation of blockchain applications. While we cannot be certain of the long-term impact of these acts, it is certain that these discussions and actions will reduce people's hesitation in terms of both understanding and investing in crypto. Additionally, the Federal Reserve is expected to cut interest rates in November, which is likely to drive more capital into risk assets, and the Digital Asset Trading System (DATS) will also lock capital into long-tail assets. Investors' risk aversion sentiment is gradually diminishing, and there is a continuous increase in the appetite for capital inflows.

There is a shift in investment allocation: one-third of the capital is flowing into "bottom-up" opportunities, such as perpetual contracts, token issuance platforms, prediction markets, and new DeFi foundational protocols; the remaining two-thirds are focusing on "top-down" areas, including DATS, tokenization of real-world assets (RWAs), Exchange-Traded Funds (ETFs), and companies preparing to go public. In this cycle, public market assets have taken the lead, allowing a wider audience to easily access crypto assets. For the industry, this is a very positive signal. This balanced situation indicates that the market is gradually maturing, emphasizing both innovation and integration with traditional finance.

The window for drafting a crypto legislative blueprint is very short, and with the current government supporting the crypto industry, this window will remain open until the mid-term elections in 2026. The DeFi Education Fund is dedicated to protecting software developers: not only did they submit feedback to the Senate Banking Committee's "Digital Asset Market Structure Information Request," but they also recently released a discussion draft of the "2025 Responsible Financial Innovation Act." The Wyoming Blockchain Workshop, held last week, focused on digital asset regulation, emphasizing the urgency for the U.S. to establish a clear crypto regulatory framework and the necessity to build a balanced market structure. Current government officials attended the workshop, which included an agenda for promoting forward-looking regulation. Looking into the first quarter of 2026, we expect the regulatory foundation to be stronger than in any previous cycle, especially given the time-sensitive context.

Token Listings and IPO Market Restart

In 2025, the number of token listings has decreased, and fewer new tokens have been able to sustain price gains, which has negatively impacted downstream trading. Projects relying on token issuance will find it more challenging to raise funds if they lack market appeal.

In contrast, the IPO window has reopened. In 2025, 95 companies have already gone public on U.S. exchanges, raising a total of $15.6 billion as of mid-June, a 30% increase from 2024. IPOs of crypto-related companies such as Circle and BitGo have led the way, sparking a new trend where investors are starting to allocate funds to crypto stocks rather than tokens. A key milestone was reached on June 5, 2025, when Circle went public: it debuted at $31 per share and surged to $233 by mid-July, yielding over 5x returns and achieving a market cap of $449.8 billion. Recently, both Figure and Bullish also completed their IPOs, with Bullish being the first company to partially raise $1.15 billion through a stablecoin offering. BitGo is planning to proceed with its IPO, having raised $100 million during the bear market of 2023, highlighting investor interest. Cryptocurrency companies are now more focused on optimizing revenue and growth rather than pursuing speculative token launches.

The wave of crypto IPOs and other "top-down" trends are attracting traditional investors through stable, revenue-focused business models (rather than volatile cryptocurrencies). The IPO surge is just beginning, with more companies expected to join in the coming months.

Mergers and Industry Maturation

2024 was a record year for mergers and acquisitions, with over 100 transactions totaling $17.3 billion, and 2025 is poised to surpass 2024 in transaction volume. From January to July alone this year, 76 deals have been completed, amounting to $6.23 billion, 3.6 times the total for all of 2024. At the current pace, 2025 is expected to see over 130 M&A transactions for the full year.

The M&A momentum in 2025 more reflects signals of industry maturation rather than pent-up demand release. For example, strategic acquisitions like Robinhood's purchase of Bitstamp indicate that mature companies are focusing on building integrated platforms. Robinhood's multi-billion-dollar bet on the future of crypto adds more credibility to the ecosystem. In the second quarter of 2025, Robinhood's crypto business revenue surged 98% year-over-year to $160 million, with total company revenue growing by 45% to $9.89 billion and profits reaching $386 million. As a retail-user-centric stock trading platform, Robinhood's embrace of blockchain infrastructure showcases the industry's trend towards mainstreaming and compliance-oriented infrastructure transformation.

Likewise, later-stage financing transactions also reflect a focus on the "revenue-driven, compliance-oriented model." For example, in the second quarter of 2025, Securitize raised $4 billion from Mantle for RWA tokenization; the prediction market platform Kalshi secured $1.85 billion in funding, reaching a valuation of $20 billion. These actions indicate that the focus of the crypto industry has shifted towards collaborating with traditional financial institutions to build together, rather than merely chasing speculative opportunities.

Cross-Integration of the Crypto Industry with Other Fields

The crypto industry is no longer in isolation but is deeply integrating with cutting-edge technologies and the global financial system.

In the field of artificial intelligence, OpenMind's OM1 + FABRIC technology stack has filled the "missing layer" in the robotics industry, enabling decentralized collaboration among different robots; Worldcoin's iris scan identity verification system leverages blockchain identity layers, potentially allowing AI agents to achieve autonomous authentication and transactions, addressing a critical challenge in AI agent secure interactions in the crypto domain; Decentralized AI platforms such as Sahara AI (decentralized version of Scale AI) and Sentient (decentralized version of Hugging Face) are disrupting traditional AI infrastructures. Currently, the application layer of crypto AI is still in its nascent stage, but its potential may give rise to a whole new market structure through on-chain agency and transaction systems.

In the payment sector, stablecoins (especially Circle's USDC) have become a vital part of the global payment system, and the "Genius Act" has further accelerated the adoption of USDC. In the first quarter of 2025, Circle's revenue surged by 58.6% to reach $5.79 billion. Analysts predict that the daily transaction volume of stablecoins could reach $250 billion within the next three years; if the growth trajectory continues, stablecoins may even surpass traditional payment systems like Visa in the next decade. Companies like PayPal and Visa are exploring stablecoin integration, incorporating stablecoins into mainstream payment channels. The collaboration between Robinhood and Arbitrum allows Robinhood users to directly engage in USDC transactions on Arbitrum, lowering the barrier for retail users to use stablecoins. This partnership is just the beginning, with Arbitrum playing a crucial role in expanding stablecoin applications, thus validating the value of Layer 2 solutions in bridging crypto and traditional finance.

This cross-integration of key industries has brought together experts from the fields of artificial intelligence, fintech, and consumer technology, blurring industry boundaries. The crypto industry, as the infrastructure of decentralized systems, is gradually becoming a critical layer in the global tech stack.

Future Outlook

We anticipate that from the fourth quarter of 2025 to the first quarter of 2026, the market cycle will become even stronger structurally. Unprecedented regulatory clarity, expected rate cuts, and a significant influx of capital from strategic M&A and IPOs are collectively building a robust industry foundation. The current momentum, centered around "real-world utility value," has laid the groundwork for accelerated industry growth. Our strategy is to seize this opportunity, focus resources on high-conviction investments in Series A companies that are poised to define their respective sectors.

From the beginning of 2025 to the present, the U.S. IPO market has seen 224 IPOs. The number of IPOs in the first half of 2024 was 94, while in the first half of 2025, it reached 165, a 76% increase. In just the first half of 2025, there were 185 crypto-related M&A transactions, expected to surpass the 2024 full-year level of 248. The successful IPOs of well-known companies like Circle and the acquisition of crypto firms by traditional financial giants are all indicative of the impending cycle strength.

The convergence of crypto with artificial intelligence, payments, and infrastructure, coupled with regulatory tailwinds and strong investor interest, will propel the industry into an era of accelerated growth. Seizing this opportunity, we will continue to solidify the cryptocurrency industry's position as a global financial and technological cornerstone.

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