Deng Chao, the CEO of HashKey Capital, a prominent institutional asset management firm, has shared insights about the future of venture capital (VC) investment in crypto projects. Chao expressed confidence that 2025 will see increased VC interest, particularly in areas such as stablecoin solutions, real-world asset (RWA) tokenization, artificial intelligence, and infrastructure development.
Chao attributed this anticipated surge in investment to a combination of factors, including higher digital asset valuations expected in 2024 and the potential re-election of Donald Trump as U.S. president. He stated:
“With the U.S. adopting supportive macroeconomic policies and advancing regulatory frameworks for cryptocurrencies, these factors are likely to create favorable conditions that attract more VC funding in 2025.”
However, Chao also warned of potential macroeconomic challenges, such as geopolitical conflicts and rising government deficits, which could heighten market volatility and investor uncertainty.
Real-world Asset Tokenization and Emerging Economies
Chao highlighted stablecoins as a proven and increasingly important crypto use case, particularly in emerging markets. Dollar-backed stablecoins, which represent tokenized real-world assets, are gaining traction as a secure store of value for individuals in regions with unstable local currencies or strict capital controls.
Offering advantages such as low transaction costs, near-instant settlements, and accessibility without requiring a bank account, stablecoins are becoming a key tool for financial inclusion. The World Bank estimates that approximately 1.4 billion people worldwide remain unbanked, a gap that smartphones, internet access, and crypto wallets are beginning to bridge.
The tokenization of real-world assets—spanning government bonds, equities, corporate debt, collectibles, and more—is a rapidly growing sector. By 2030, this market is projected to reach a staggering $30 trillion in value, with blockchain technology driving its adoption.
Rising VC Investment in Crypto for 2025
Industry analyst Infinity Hedge has predicted that VC funding in the crypto sector will surpass 2024 levels in 2025, though it is unlikely to return to the record highs witnessed during the bull market of 2021. Data reveals that crypto firms secured approximately $13.6 billion in funding during 2024, up from $10.1 billion in 2023.
Market analytics platform PitchBook forecasts that crypto-related VC investments could grow to $18 billion in 2025, driven by renewed investor confidence. Similarly, Galaxy Digital projects a 50% year-over-year increase in VC funding for the sector. However, these figures are expected to remain below the peak investment levels recorded in 2021 and 2022.
In summary, the crypto sector appears poised for a resurgence in venture capital interest as regulatory clarity improves and digital asset use cases, like stablecoins and tokenization, gain further traction. Nevertheless, macroeconomic risks remain a potential hurdle in the path forward.
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