Tiger Research: Five Key Changes in Crypto VC for Q3 2026

Author: Tiger Research Reports

Compiled by: Shenchao TechFlow

Senchao Insight: The sentiment in the crypto market shifted from fear to greed in Q3, but corporate financing did not see a corresponding recovery, with funds bypassing startups and flowing directly into assets. This report breaks down five key changes: mergers and acquisitions (M&A) have shifted from buying sectors to filling licensing gaps, traditional VCs have lost pricing power, early-stage rounds are contracting, debt financing has surpassed equity, and capital is concentrating on infrastructure that connects with traditional finance. The signal is clear for teams still relying on VC equity financing.

Key Points

• The number of M&A deals remains stable, but large acquisitions have given way to smaller transactions, with buyers focusing more on specific capabilities such as licensing, payments, and institutional trading.
• The influence of traditional leading VCs on deal terms has diminished, with strategic investors becoming more active, including CEX VCs looking to expand their own exchanges and public chain ecosystems through investments.
• Seed rounds and other early-stage rounds are contracting, with capital concentrating on A to C round companies that have proven their business through revenue and licensing.
• Venture capital equity financing is decreasing, while cash flow-based financing methods are expanding, including bond issuance, credit lines, and SPAC listings.
• Capital is concentrating in areas related to traditional finance and real-world use cases, such as payments, stablecoins, tokenized securities, and AI-related infrastructure, rather than isolated blockchain ecosystems.

1. Market Rebound, Opportunities Shift to Institutional Side

In Q3 2026, the sentiment in the crypto market shifted from fear to greed.

After two consecutive quarters of decline in the first half of the year, Bitcoin rose 43% in Q3, marking the strongest third-quarter performance since 2017. The U.S. spot Bitcoin ETF recorded a net inflow of $6.34 billion. The crypto fear and greed index, which was in extreme fear territory throughout the first half of the year, entered the greed zone on August 20 and maintained that level for most of September.

However, disclosed transaction amounts indicate that this rebound has not translated into more investment in crypto companies.

Funds returning with rising prices are flowing directly into crypto assets themselves, while corporate investments that lock up funds for years have not followed short-term sentiment changes. The following sections will analyze the main changes in Q3.

2. Five Key Changes in Q3

• M&A: Shift from Expansion Deals to Capability Acquisitions
• VC Market: Leading Investors Losing Power, Strategic Capital Rising
• Financing Stages: Caution in Early Rounds, Focus on Proven Businesses
• Financing Methods: Listings and Debt Financing Surpass Equity
• Sectors: Capital Concentrating on Infrastructure Connecting to Traditional Finance

2.1. M&A: Shift from Expansion Deals to Capability Acquisitions

The number of M&A deals in Q3 remained the same as in the first half of the year, but the scale of transactions has significantly decreased.

The number of M&A deals was 39 in Q1, 36 in Q2, and 37 in Q3, while the scale of transactions appears to have declined. Data from Architect Partners, an independent M&A advisory firm tracking crypto transactions, shows that the number of crypto M&A deals in Q3 decreased by 7% quarter-over-quarter, and the transaction amount fell by 83%.

The decline in transaction scale is due to a change in targets. In the first half of the year, the market was driven by transactions aimed at acquiring entire companies to establish new business lines, such as Mastercard's $1.8 billion acquisition of BVNK. In Q3, acquisitions were focused on filling gaps in existing businesses of buyers.

Circle agreed to acquire Singapore-based cross-border payment company Tazapay, MoonPay agreed to acquire North Capital, which holds a U.S. securities license, and BitGo acquired NYDIG's institutional trading business.

Obtaining a license and proving a capability internally takes a long time, while acquisitions can immediately provide both. In a stage where the industry's operational structure is still taking shape, this time-saving has become a competitive advantage. The focus of M&A is rapidly shifting from expansion into new businesses to acquiring specific capabilities.

2.2. VC Market: Leading Investors Losing Power, Strategic Capital Rising

The influence of major leading institutions has significantly declined. The five most active leading institutions since 2024 (Polychain, Pantera Capital, Hack VC, Paradigm, and a16z) led an average of 2.0 deals per month in Q3, down from 3.7 in the first half of the year.

These institutions previously led 50% to 75% of the transactions they participated in and set valuation anchors for the market, but their control over rounds is weakening.

In contrast, YZi Labs (formerly Binance Labs) participated in 14 deals, nearly three times the average monthly level in the first half of the year, followed closely by Coinbase Ventures with 12 deals.

The increased participation of CEX VCs is due to their structurally different investment targets. Financial VCs pursue capital gains from equity or asset value appreciation, while CEX VCs can gain additional trading volume and new users when portfolio projects land on their exchanges or public chains (such as BNB Chain or Base).

Therefore, even with uncertainties in price and valuation, these institutions have clear reasons to continue investing. The result is that Q3 rounds reflect more the influence of strategic investors seeking to grow their own platforms rather than financial investors setting prices.

The VC market in Q3 shows a shift: from targeting high returns through financial investment to creating business and ecosystem synergies through strategic investment.

2.3. Financing Stages: Caution in Early Rounds, Focus on Proven Businesses

Investors are unwilling to take on unproven risks. Seed round transactions accounted for 15.0% of all transactions, the lowest quarterly share since 2024. The average monthly number of seed round transactions decreased by 28%, more than double the overall transaction decline of 13%.

Disclosed investments from A to C rounds increased by 29% quarter-over-quarter, with C round financing in Q3 alone exceeding the total for the entire first half of the year.

Early investments spread funds across many small projects, relying on a few success stories for high returns. For this model to work, subsequent investors must continue to buy equity or tokens at higher valuations.

As corporate investments in Q3 became more cautious overall, market expectations for such subsequent investments seem to have weakened. Investors are instead concentrating funds on expansion rounds of companies that have already proven their business through revenue and licensing.

Jeeves and EDX Markets both completed C round financing in Q3, reflecting the same pattern as payment and trading infrastructure companies. The investment standards in the market are shifting from token issuance timelines to actual business evidence.

2.4. Financing Methods: Listings and Debt Financing Surpass Equity

Large amounts of funds in Q3 also came from outside venture capital equity. Among 13 transactions valued at over $100 million, 4 involved listings or debt financing.

Securitize went public on the New York Stock Exchange through a SPAC merger, and Ripple Prime issued $275 million in unsecured senior notes. On a monthly basis, venture and strategic equity financing decreased by 24%, while debt financing rose from $70 million to $190 million, and fundraising through listings increased from $80 million to $150 million.

Bonds and listings either require repayment capability or need public market valuations. In the first half of the year, debt financing mainly came from Bitcoin financial companies, such as Metaplanet borrowing to purchase Bitcoin.

In Q3, cash flow-positive companies, such as prime brokers, remittance services, and stablecoin lending, borrowed to expand their businesses. The repayment basis shifted from Bitcoin prices to corporate cash flow. Some companies can now finance like ordinary businesses, no longer needing venture capital, which may narrow the role of VCs to early stages.

2.5. Sectors: Capital Concentrating on Infrastructure Related to Traditional Finance

By sector, capital in Q3 flowed into areas connecting traditional finance with the crypto ecosystem, rather than new layer 1 and layer 2 protocols.

The infrastructure sector's share of disclosed investments more than doubled from 8.1% in the first half of the year to 18.2%. The growth came from AI-related transactions rather than new blockchain mainnets. Leading companies include Ionic Digital, which shifted its business to AI data centers, and AI training infrastructure company Prime Intellect.

About half of the capital categorized as "other" flowed into tokenized securities infrastructure, such as Securitize and Alpaca. Payments and stablecoins are the only sector that maintained a steady share.

In contrast, sectors with little connection to traditional finance attracted significantly less capital. In the prediction market, a single transaction of about $300 million in Polymarket accounted for 91% of Q3 investments. DeFi investments decreased by 71%, and the number of transactions also dropped, leaving only 3.0% of the total. The largest DeFi transaction was Cari Network, a deposit token network supported by regional banks in the U.S. There were no new investments in the custody sector, with activity limited to integrations between mature companies, such as BitGo's acquisition of NYDIG's trading business.

In Q3, capital only flowed to mature companies that already hold licenses and regulatory approvals or projects associated with traditional financial institutions like banks. Investments have clearly shifted from building new crypto ecosystems to the distribution channels and infrastructure needed for traditional financial capital to enter the crypto market.

3. Implications for Various Market Participants

Despite the price rebound, capital inflow into crypto companies remains tight in the third quarter. Capital has shifted its focus: small acquisitions that can enhance specific capabilities have replaced large deals, with strategic investors seeking to expand their platforms becoming more prominent than financial lead investors.

Capital is also concentrated on companies that have proven their business through revenue and licenses, rather than early-stage projects. As the trends of control and fundamentals mentioned in the previous report continue, the following sections outline the main tasks faced by various market participants.

3.1 Crypto Companies and Founders

Prepare for longer early financing cycles: The decline in the number of seed round transactions in the third quarter is faster than the market average. Before the next round of financing, companies should conservatively recalculate their funding runway to reach specific milestones, such as revenue, licenses, or significant partnerships.

Review the terms of strategic investments: Capital from CEX-associated VCs continues to flow in, but may come with conditions, such as requiring a commitment to use a specific CEX or blockchain. Companies should check in advance whether these conditions will limit future financial investments or company sales.

Establish regulatory and licensing capabilities: Recent acquirers are focusing on immediately usable capabilities, such as securities licenses, payment networks, and trading infrastructure, rather than entire companies. Companies considering a sale or partnership should clarify their core competencies and how these align with the businesses of potential partners.

Utilize more diverse financing methods: Companies with stable cash flow can consider traditional financing options, such as issuing bonds or credit lines, to reduce equity dilution.

3.2 Traditional Financial Institutions and Enterprises

Enter the market through acquisitions: For new crypto businesses, acquiring a specialized company with licenses and operational experience may be more efficient than building infrastructure internally. Mergers and acquisitions around infrastructure, licenses, and trading capabilities continue to increase.

Assess transactions based on actual conditions: Looking only at disclosed transaction amounts does not provide insight into how the market values these businesses. Buyers should prioritize the fit with their own business and work with professional advisors to verify whether a deal can create value beyond the price.

3.3 Investors and Retail Participants

Be cautious about financing news: VC financing announcements should not be automatically viewed as buy signals. The large-scale token sales and excess trading returns of the past are harder to expect in the current market, and retail investors should recognize that the upside potential of early positions is limited.

Evaluate projects based on fundamentals: Project assessments should consider revenue structure, regulatory compliance, and connections to traditional finance, rather than token issuance timelines or short-term news.

The crypto market is moving beyond short-term expectations, shifting towards demonstrating real value and practical use. Some investors may regret such changes, but the market's transition to an industry can be seen as a healthy development.

Market participants who can recognize this structural change and strengthen their core competitiveness and risk management will be better prepared for the next phase of the market.

Data and Methodology

Data source: Data from January 2024 to September 2026 is based on the RootData API, covering a total of 3,515 rounds of financing, marked by RootData registration dates. The Ionic Digital and Gauntlet transactions completed in June but announced in July are counted in the third quarter. Among the 195 third-quarter records in RootData, two are not investments: one is the DEX launch collaboration between Robinhood and dYdX Labs, and the other is the membership of the Ethereum Enterprise Alliance, both of which are excluded, leaving 193 transactions for analysis.

Amount criteria: The amounts in this report are the sum of disclosed transaction amounts, with 112 out of 193 transactions in the third quarter disclosed, and 286 out of 441 transactions in the first half disclosed. Transactions with undisclosed amounts are not included, so the actual transaction volume is greater than the figures shown. One round of Raven financing recorded in RootData is $90 million, but it was excluded because the original source indicated that this figure was a valuation rather than an investment amount.

M&A amounts: Disclosed M&A amounts and the proportion of M&A in decline is 83%, based solely on transactions with recorded amounts in RootData. Transactions with disclosed amounts but not recorded in RootData, such as Circle and Tazapay, amount to $400 million according to SEC filings, and future assets and Korbit, approximately 141.4 billion KRW, about $10 million, are noted separately in the text. The third-quarter M&A comparison references quarterly data from Architect Partners.

Financing types: M&A follows RootData's round types. Public fundraising includes IPOs, post-IPO financing, and listings by Securitize. Debt includes debt financing, Ripple Prime notes, and debt portions in Félix Pago rounds. Token sales include OTC and public sale rounds. All other transactions are classified as venture capital and strategic equity investments, which also include purchases of existing shareholder shares, such as Hana Financial Group and Samsung Securities buying shares in Dunamu in the first half.

Comparison of the first half and the third quarter: Due to the different lengths of the two periods (six months and three months), the number and amount of transactions are converted to monthly averages for comparison. Data from the first half has been recalculated based on subsequent data from RootData (441 transactions, previously 435 transactions).

Financing stages: Data is counted by stage, such as seed rounds and A to C rounds, and only includes transactions recorded in RootData (143 out of 193 transactions in the third quarter). For example, Fasset's C round and Augustus's B round are not included in stage statistics because RootData did not record their stages.

Track classification: Each transaction is classified into a single track based on RootData project tags, prioritized in the following order for more specific business models: prediction markets, CEX, custody, payments and stablecoins, DeFi, gaming, NFTs, social and entertainment, and infrastructure. Large transactions without tags are manually classified after reviewing the business and those that cannot match any track are counted as others.

Institutional participation in transactions: Transactions involving at least one investor classified by RootData as a company or institutional entity. This is consistent with the definition of "transactions involving traditional financial institutions" in the previous report.

Transactions directly involving traditional financial institutions: Transactions involving at least one bank, securities company, asset management company, exchange operator, payment network, credit rating or data company, traditional market maker, or investment department of the above institutions. Transactions without investor information in RootData are not included in the statistics, so this proportion is a conservative figure. For example, Hana Financial Group and Samsung Securities' acquisition of Dunamu shares in the first half, as well as a regional U.S. bank's investment in Cari Network in the third quarter, were not counted due to the inability to obtain investor information. Investors identified through keyword recognition have been individually verified, and fintech companies such as PayPal, Stripe, Robinhood, and Nium are not included as traditional financial institutions.

Key transaction verification: Key transactions in the third quarter mentioned in the text have been cross-verified against company press releases, regulatory documents, and mainstream media reports. Transactions still in the agreement stage (S&P Global with OpenZeppelin, Nasdaq with LeveL Markets, Circle with Tazapay) have not yet completed settlement.

Market indicators: Bitcoin prices and quarterly returns are based on daily closing prices of Binance BTC/USDT (UTC). The Crypto Fear and Greed Index comes from Alternative.me, and the net flow of U.S. spot Bitcoin ETFs is based on SoSoValue data cited by Investing.com. The CLARITY Act vote and SEC exemptions are based on U.S. Senate voting records and related reports from SEC announcements.

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