Crypto Startups Find a Second Wind as Capital Returns and Use Cases Mature

Funding Rebounds, but Remains Selective

After an extended reset in 2022–2023, venture capital is flowing back into crypto with more discipline. Quarterly dealmaking has climbed back into the multi-billion-dollar range as late-stage rounds reappear and median deal sizes stabilize, industry reports show. Founders say investor questions have shifted from token timing to unit economics, custody, and distribution.

Macro tailwinds are helping. The approval and rapid adoption of U.S. spot Bitcoin ETFs drew more than $50 billion in assets within months of launch, boosting liquidity and sentiment across the ecosystem, as CoinDesk reported. That demand signal has encouraged generalist funds back to the table, even as they remain choosy about use cases and governance.

Where Capital Is Flowing: Infra, DeFi, and Consumer Onchain

The current crop of breakout raises reflect a back-to-basics thesis: fund the rails, then the apps that can run at scale. Infrastructure startups building faster chains, modular data availability, and interoperability have landed the largest checks; reported examples include Monad Labs’ approximately $225 million round and Berachain’s roughly $100 million raise, as investors bet on performance and developer tooling. In consumer, crypto-native social platforms and identity primitives are resurfacing, highlighted by Farcaster’s $150 million financing at a reported unicorn valuation.

DeFi is maturing beyond speculative loops into liquidity infrastructure and risk markets embedded in wallets and exchanges. Restaking and security-as-a-service are opening fresh design space for middleware providers and yield platforms, while tokenization pilots are seeding on-chain capital markets with real-world assets from treasuries to private credit. For more on related Crypto developments, founders point to declining transaction costs on L2s and interoperable standards as key unlocks for mainstream use.

Regulation, Compliance, and the Cost of Trust

Policy clarity remains uneven, but momentum is tangible. Europe’s MiCA regime is now in force for stablecoins, pushing startups to formalize risk controls and licensing earlier in their lifecycle, while U.S. enforcement continues to shape distribution choices for tokens and wallets. The compliance stack is becoming a distinct startup category—KYC orchestration, travel rule routing, and sanctions screening are folding into marketplaces and custodial APIs out of the box.

Importantly, the share of illicit volume on-chain remains a small fraction of overall activity, supporting the business case for enterprise-grade crypto rails. That context—and better analytics—has driven more financial institutions to test tokenized deposits and settlement pilots, according to the 2024 Crypto Crime Report by Chainalysis. Founders are also designing data minimization and selective disclosure into wallets from day one, a shift that reduces onboarding friction without sacrificing auditability.

Outlook: Runway, Monetization, and M&A

The next eighteen months will test whether usage can sustain valuations. On-chain activity, active users, and fees have trended upward across multiple networks in 2024, building a revenue foundation for infra-focused startups, according to recent research. Consumer teams, meanwhile, are experimenting with freemium wallets, embedded payments, and service fees tied to on-chain actions rather than speculative token launches.

With public markets signaling an eventual reopening for listing-worthy names, secondary transactions and strategic M&A are already picking up across wallets, custody, and data. Exchanges and fintechs are buying distribution and compliance capabilities, while protocols are funding ecosystem grants to accelerate app growth on their stacks. These moves align with broader Crypto trends: consolidate the rails, standardize the UX, and let developers ship products people can use without reading a white paper.