PitchBook analyst Robert Le projects that crypto venture capital funding will be “much much stronger” in 2025 compared to 2024.

“We expect to see $18 billion or more in venture capital funds allocated to crypto,” Le shared with CNBC’s Jordan Smith. This marks a 50% rise from 2024, although it remains below the approximately $30 billion that was invested in 2021 and 2022,” he noted.

Recap of 2023 and 2024

Le characterized 2023 as a tough year for crypto funding, mainly due to the fallout from FTX, a decline in trust, and rising interest rates.

Nonetheless, 2024 commenced positively, fueled by the approvals of spot Bitcoin exchange-traded funds (ETFs).

Despite experiencing a slowdown mid-year, “we’re likely to conclude [2024] with about $11 [billion] to $12 billion in invested capital, which represents a 10 to 20% increase over 2023,” he mentioned.

Expectations for 2025 Funding

Le’s forecast of $18 billion or more in crypto venture capital is a 50% uptick from 2024. He identifies several promising factors for the sector, including:

• Generalist investors are renewing their interest, indicating the potential for large-scale investments.
• Crypto-native funds possess substantial dry powder but require participation from generalist investors for significant growth.
• Financial institutions are set to play a crucial role, leveraging their trusted relationships with regulators.

Changing Focus

Le anticipates a pivot towards application-layer investments, moving past infrastructure projects. Examples include:

• Decentralized applications (dApps) aimed at non-crypto users with improved risk management.
• Use cases that capitalize on crypto infrastructure for non-crypto industries such as mobility and energy data.

He contends that just as AWS provided a foundation for companies like Uber and Airbnb, robust applications built on crypto infrastructure are essential to unlocking its full potential.

The Value of ‘Nothing’

Le underscored the critical need for regulatory clarity to foster growth in the crypto industry. He expressed tempered optimism regarding the U.S. regulatory landscape in 2025, noting:

• A change in SEC leadership with the forthcoming Trump administration could lead to fewer enforcement actions.
• Legislative advancements, such as stablecoin regulations or crypto-specific policies, would be advantageous but are not assured.
• A mere absence of new regulatory measures could represent an improvement over the past two years of uncertainty.

Le concluded that a steady regulatory environment, along with increasing institutional involvement and application-centric investments, could pave the way for significant progress in the crypto sector in 2025.

However, he asserts that even if the next presidential administration and arriving lawmakers “do nothing,” it would already constitute an improvement.

For the complete interview, see below.