Crypto VC Funding Drops as Investors Shift Focus to Stablecoins and DeFi

In 2025, the cryptocurrency ecosystem continues to experience shifts amid market fluctuations and evolving investor priorities. Venture capital funding has slowed, with fewer large-scale deals closing compared to earlier in the year. Despite this, strategic investments and innovation persist, particularly in areas like stablecoins, blockchain infrastructure, and decentralized finance (DeFi). Key projects such as Telcoin, Hercle, Momentum, and Temple Digital are securing funding to develop the infrastructure that aims to drive mainstream adoption and foster the growth of the digital asset economy.

• Crypto venture capital activity remains subdued in 2025, with a decline in funding rounds and deal volume.
• Strategic investments focus on building core blockchain infrastructure, stablecoins, and DeFi platforms.
• Telcoin and Hercle raise significant capital to expand banking services and enhance cross-border payment solutions.
• Decentralized exchanges like Momentum continue rapid growth, attracting major institutional funding.
• Innovative firms are developing institutional-grade trading and payment infrastructure to support mainstream adoption.

The once-booming venture capital landscape within the crypto industry shows signs of cooling, with decreasing activity in high-profile funding rounds during the fourth quarter of 2025. Industry experts attribute this slowdown to a confluence of factors, including macroeconomic uncertainties and increasing competition from emerging AI technologies. Kaden Stadelmann, CTO at Komodo Platform, emphasized that AI has drawn significant investor interest, often overshadowing traditional crypto projects. This shift has contributed to a cautious approach among venture firms, favoring more resilient segments of the blockchain ecosystem.

Interestingly, much of the remaining investment activity is now concentrated around core Bitcoin (BTC) projects, which often rely on community support rather than traditional VC funding. Gabe Salinas, CEO of Alamo Labs, pointed out that Bitcoin-centric ventures benefit from grassroots backing, underscoring the strength of decentralization at the ecosystem’s core. Nevertheless, some sectors remain vibrant, particularly those developing foundational blockchain infrastructure—especially in stablecoins, payment solutions, and decentralized trading platforms.

Telcoin Advances Digital Asset Banking with $25 Million Funding

Fintech innovator Telcoin has secured $25 million in a pre-Series A funding round to accelerate the launch of its digital asset banking platform, slated for later this year. This funding supports Telcoin’s compliance with its Nebraska Digital Asset Depository Institution (N-DADI) charter, a pioneering U.S. state-level licensing framework enabling custody and management of digital assets under regulatory oversight. The raised capital will also facilitate the rollout of eUSD, a new stablecoin pegged to the U.S. dollar, designed specifically to streamline payments and remittances within Telcoin’s ecosystem, diverging from traditional trading-focused stablecoins.

Related: Circle discusses GENIUS Act implementation: ‘Simple, strong rules’

Hercle Secures $60 Million to Expand Stablecoin Infrastructure

Hercle, a company specializing in stablecoin infrastructure for digital payments, announced a substantial funding round totaling $60 million. Led by F-Prime, which invested $10 million in equity, the round also includes a $50 million credit line to bolster liquidity. Hercle’s platform, which has handled over $20 billion across more than 200 institutional clients, emphasizes fast transaction settlement—90% settle in less than five minutes—aimed at enabling efficient cross-border payments at scale.

The stablecoin market is accelerating rapidly and approaching mainstream adoption. Source: RWA.xyz

Sui Blockchain’s Decentralized Exchange Momentum Raises $10 Million

Momentum, the leading decentralized exchange (DEX) on the Sui blockchain, has raised $10 million at a valuation of $350 million. The funding was led by HashKey Capital, with participation from Anchorage Digital and other strategic investors. Founded by former Libra and Amazon engineer Wendy Fu, Momentum boasts over 2.1 million users and total trading volume exceeding $22 billion. The company plans to expand beyond the Sui network through cross-chain integrations and aims to develop compliance features to facilitate regulated participation by institutional investors.

Momentum’s TVL peaked above $600 million in late October. Source: DefiLlama

Temple Digital Raises $5 Million for Institutional Trading Infrastructure

Building on the Canton Network, Temple Digital Group has secured $5 million in seed funding led by Paper Ventures. The startup is developing an institutional-grade trading platform that combines traditional market features—such as order books and post-trade reporting—with blockchain functionalities, including tokenization, instant settlement, and digital wallets. The funds will be used to expand product offerings and integrate more deeply with the Canton ecosystem, which has attracted significant investments from major financial players like Goldman Sachs and BNP Paribas to advance blockchain adoption in trading infrastructure.

Arx Research Secures $6.1 Million to Promote Merchant Stablecoin Payments

Arx Research, focused on digital payment hardware and software, has raised $6.1 million to accelerate manufacturing and prepare for product launch. The company’s flagship device, Burner Capital, is a handheld Point-of-Sale (PoS) terminal that enables merchants to accept both stablecoins and traditional currencies seamlessly. Integrated with Flexa technology, this device supports multiple cryptocurrencies—including Bitcoin, Ethereum, and Solana—aiming to drive broader acceptance of digital currencies in everyday commerce.

This article was originally published as Crypto VC Funding Drops as Investors Shift Focus to Stablecoins and DeFi on Crypto Breaking News – your trusted source for crypto news, Bitcoin news, and blockchain updates.