Many crypto venture bets were built around a simple promise: get in early, secure exposure to a company, its future token or both, then benefit if a network launch created publicly tradable value. Mysten Labs, LayerZero, Aptos and StarkWare were among the companies that raised capital with token exposure or related rights forming part of the investor case. The appeal was obvious: a successful launch could give backers liquidity long before an acquisition or public listing.
Crypto VCs Trade Token Beta for Payment Infrastructure Bets
24 July 2026 - 23:16 CEST
By Ana Pereira
That model is harder to defend as prices weaken, unlock schedules stretch into years and investors question whether token liquidity reflects real demand. Crypto VCs are still investing in digital assets, but that pitch is losing power.
Now, some crypto VCs say investors' new focus is strongly concentrated on stablecoin payments, settlement, security and tokenized capital markets. To an extent, VC funds are mirroring a shift already visible across the crypto market. Despite an otherwise dismal first half of 2026, companies and protocols helping traditional financial firms move onto blockchain infrastructure performed far better.
A narrower market
The shift marks a maturing of crypto venture capital rather than a full retreat from the sector. Crypto and blockchain startups raised about $4bn across 355 deals in the first quarter, according to Galaxy Research, down from the previous quarter but still above much of the 2023-2024 downturn. Later-stage deals captured about 57% of the capital invested, pointing to a market where funding is becoming more concentrated.
For Foresight Ventures partner Alice Lee, the shift is not theoretical. The firm paused token deals in late 2025 and is now focused on tokenized assets, stablecoins and AI, she said in an interview with Sandmark.
"We decided to pause all the token deals," Lee said. "The ones we're looking for now are the ones that can actually drive real revenue and real volume into the crypto world."
Borderless Capital investment partner Patrick O'Kain described the same market shift in less sweeping terms, saying crypto VC is "cyclical at the surface, but structural underneath."
Deals across the industry support that thesis. Digital Asset raised $355mn to expand Canton Network as onchain infrastructure for regulated capital markets, with backing from institutions including Apollo, BNP Paribas, Citadel Securities, HSBC and Tradeweb. Stablecoin payments provider Rain secured $250mn for its payments infrastructure, while blockchain intelligence company TRM Labs raised $70mn to develop tools used by financial institutions and government agencies to detect illicit activity.
According to O'Kain, capital is now moving into companies that bridge programmable decentralized networks with regulated institutional finance. "The companies that can become part of the financial, security, identity, payments, and data infrastructure stack are still attracting capital," he told Sandmark. "The companies built primarily around hype, incentives, or liquidity assumptions are having a much harder time."
Machines need rails
Borderless sees another customer emerging for the infrastructure now being funded: autonomous software.
As AI agents begin initiating payments, allocating capital and accessing financial products, O'Kain said they will need many of the same systems being built for institutions: identity, permissions, programmable payments, risk controls, compliance and settlement. "Those same infrastructure layers will also be essential to agentic finance," he said.
That view is beginning to influence where venture firms deploy capital. Paradigm, which managed more than $12.6bn at the end of 2024, is seeking up to $1.5bn for a fund that would expand its mandate beyond crypto into AI. The firm has said it still sees blockchain networks as potential payment and settlement infrastructure for autonomous AI agents.
Lee expects that reallocation of capital to drive a "dramatic change" in the crypto VC market in the coming years, while many firms associated with previous investment models may struggle to raise new funds.
"Most of the VCs you knew from the last cycle may not even exist in three years. But a lot of the effort and money will flow into traditional assets and equity deals. That's where we see most of the VC interest."
