The current crypto downturn is playing out differently from past cycles, with established companies gaining market share as venture capital funding for new crypto startups stalls, according to Blockchain.com Co-CEO Lane Kasselman.
In an interview with Bitcoin Magazine TV, Kasselman said that in previous down markets, venture capital fueled a wave of new startups. This time, he said, incumbents are fending off new competitors and growing larger.
“There are no venture capital fundings into new startups in the crypto sector,” Kasselman said. “Now what you see is incumbents are actually getting larger and able to absorb more market share as new portions of the sector are coming online.”
Kasselman described the period as an opportunity for incumbents such as Blockchain.com to grow, though he declined to call the bottom of the market.
“I try not to prognosticate when we are in the cycle, but it is feeling like the market is stabilizing in the right direction,” he said.
Policy and regulation
On the policy front, Kasselman said crypto has its strongest bipartisan support in Congress to date, despite growing perceptions that the industry is becoming more partisan ahead of the US midterm elections.
While Republicans have been more vocal in backing the sector, he said Democrats also support crypto and that he expects that backing to continue regardless of the election outcome.
Although the CLARITY Act remains stalled and crypto policy figures Patrick Witt and David Sacks have departed without announcing successors, Kasselman said agency-level decisions are still advancing the industry and supporting access to tokenized assets.
He also pointed to more than 30 rulemakings underway at the SEC and CFTC under the Trump administration.
Regulatory uncertainty remains a hurdle for US crypto companies. Kasselman said state-by-state money transmitter licenses and other requirements create a fragmented system that is especially difficult for startups to navigate.
“I’m hopeful we see a solution from the federal government that makes it easier for companies to operate across all of the US without necessarily needing to adhere to each and every state regulation,” he said.
Institutional influence
At the same time, institutional investors have become far more influential in crypto markets than they were in 2021, according to Kasselman. He linked the shift from retail-led activity to regulatory advances in the EU, UK, Asia and Africa, as well as the US. He said greater institutional involvement points to crypto’s growing place in the financial ecosystem.
