JPMorgan Chase & Co (JPM) said in a research note on Wednesday that it expects crypto venture capital (VC) funding to recover this year as regulatory clarity emerges during President Donald Trump’s term in office degree and more crypto-friendly policies.
Wall Street banks note that venture capital investment in the industry has been discouraged in recent years. Analysts at Nikolaos Panigirtzoglou wrote that this could be due to enforcement actions by the U.S. Securities and Exchange Commission (SEC) and the atmosphere of regulatory uncertainty during the previous administration.
this start Crypto-Assets (MICA) regulations that take effect at the end of December are expected to “further strengthen VC participation,” the report said.
Still, as crypto venture capital firms face many challenges, funding levels are unlikely to match previous peaks in 2021/22, JPMorgan said.
Traditional financial giants (Tradfi) such as BlackRock (BLK) and Franklin Templeton stable,,,, Tokenization and decentralized finance (defi), the bank said.
The report notes that nascent crypto projects are avoiding large token sales to VCs and are increasingly turning to community-driven platforms to raise funds.
JPMorgan said high interest rates also pose challenges for venture capital.
The report added that the growth of cryptocurrency exchange-traded fund (ETF) products is “a trend that has given rise to passive investing,” which could divert capital away from venture capital firms.
Read more: Galaxy Digital Says Crypto Venture Capital Market Remains Difficult in 2024
