Crypto VCs are ‘especially bullish’ on DePIN, RWAs — HashKey partner

Venture capital firms remain bullish on cryptocurrency and blockchain startups in 2025, though funding allocations are becoming more selective as investors prioritize real-world use cases that can bridge the gap between Web2 and Web3.

Xiao Xiao, a venture investments partner at the Hong Kong-based HashKey Capital, told Cointelegraph that his company remains focused on sectors such as decentralized finance (DeFi), gaming, stablecoins and artificial intelligence. 

However, HashKey is “especially bullish on solutions that can bridge Web2 with Web3, such as DePIN and RWA tokenization,” said Xiao, referring to decentralized physical infrastructure networks (DePINs) and real-world assets (RWAs) on the blockchain. 

DePIN projects, which use blockchains to bridge the physical and digital worlds, have a market capitalization of nearly $20 billion, according to DePINscan. 

In 2024, DePINs raised more than $350 million across pre-seed, seed and Series A funding rounds, according to Messari.

Meanwhile, RWAs or financial and other tangible assets tokenized on the blockchain, have reached $17.1 billion in cumulative value, according to RWA.xyz. So far, private credit and US Treasury debt have emerged as the biggest use cases for financial tokenization. 

RWAs featured prominently in the latest edition of Cointelegraph’s VC Roundup, with tokenization protocol Hamilton Treasury closing a pre-seed round to bridge traditional financial assets with the Bitcoin network. 

Related: RWAs rise to $17B all-time high, as Bitcoin falls below $100K

A maturing market with a tougher selection process

Xiao told Cointelegraph that HashKey’s fundraising process has been fairly smooth, as “investors are generally bullish on crypto in the current economic environment.” This is true even among traditionally conservative investors, such as family offices, which are now seeking exposure to the digital asset sector.

However, “the more challenging function is choosing which projects to deploy capital to,” said Xiao. “Given the increasing abundance and diversity of crypto ventures and projects, the selection process is becoming tougher.”

Although HashKey is based in Asia, Xiao acknowledged that the election of US President Donald Trump and activity in Silicon Valley “generally influence the rest of the world.” 

“The Trump administration can thus be seen as a flywheel: It may accelerate crypto regulation and, in turn, crypto activity across Asia,” the HashKey executive said.

Overall, Xiao expects higher VC deal activity in 2025 — a view that’s shared by PitchBook, which expects crypto funding deals to reach $18 billion this year from $13.6 billion in 2024.

Galaxy Research said VC funding deals will be aided by a combination of declining interest rates and increased regulatory clarity in the United States. 

For venture capitalists, one of the biggest shifts from 2024 is the “growing preference for consumer-facing projects over infrastructure-focused ones,” said Xiao, adding:

“This shift indicates a maturing market where early-stage teams can now build applications more efficiently, leveraging established infrastructure and AI advancements.”

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