Experts predict a surge in venture capital (VC) funding for US crypto startups under the pro-crypto stance of the incoming Trump administration.
In the fourth quarter of 2024, nearly half (46%) of all VC funds poured into cryptocurrency startups were directed to US-based companies, according to a report from Galaxy Digital’s Crypto and Blockchain Venture Capital, filed on Jan. 15. This far exceeded the second-highest jurisdiction, Hong Kong, which attracted 16% of the funding.
The US also dominated deal activity, with 36% of all crypto VC deals involving American companies, followed by Singapore at 9% and the UK at 8%.
US Leads Despite Regulatory Challenges
Ryan McMillin, co-founder and chief investment officer of Australian crypto investment firm Merkle Tree Capital, explained to Cointelegraph that the US leads the crypto VC landscape due to its established financial markets and innovative ecosystems. This dominance has persisted despite regulatory headwinds under the outgoing administration.
“The US has more venture capitalists and limited partners than any other region,” McMillin said. “In Q4, we saw a 46% quarter-on-quarter increase in capital deployment, likely fueled by anticipation of a crypto-friendly Trump administration.”
Trump, set to be inaugurated on Jan. 20, has promised a supportive stance on crypto. Additionally, a significant number of pro-crypto candidates have secured Congressional seats, signaling a shift in US policy.
A Pro-Crypto Administration Signals Optimism
Industry experts suggest the Trump administration could foster unprecedented growth in the US crypto sector. McMillin anticipates a marked increase in venture capital activity, saying, “The shift from a hostile regulatory environment to a pro-crypto administration will be transformative. Institutional interest won’t stop at Bitcoin and Ethereum; mid-cap, small-cap, and VC investments will expand significantly.”
The Galaxy report also expressed optimism about the incoming administration’s potential to solidify the US as a global leader in crypto innovation. Key regulatory developments, such as stablecoin frameworks and market structure legislation, are expected to pave the way for traditional financial institutions to enter the crypto space more confidently.
Regulatory Headwinds and Enforcement Trends
Despite the US’s dominance, the Securities and Exchange Commission (SEC) has remained a formidable hurdle for the crypto industry. In its annual report for the fiscal year ending Sept. 30, the SEC revealed $8.2 billion in financial penalties, though the number of enforcement cases declined by 26% from the previous year to 583.
Galaxy Digital’s head of research Alex Thorn and analyst Gabe Parker acknowledged the challenges but pointed to the resilience of US crypto companies. “The incoming administration and Congress are poised to be the most pro-crypto in history. We expect US dominance to grow further, particularly with clear regulatory frameworks on stablecoins and market structures,” they wrote.
The Road Ahead
As the Trump administration takes office and pro-crypto policies gain traction, the US is positioned to strengthen its leadership in the global crypto industry. With institutional interest expanding and the regulatory landscape likely to stabilize, the future looks bright for American crypto startups and investors alike.
