Crypto lawyer Irina Heaver's analysis reveals a shift in funding towards regulated firms, with significant investments from major financial players.
By Olivier Acuna|Edited by Stephen Alpher1 hr ago3 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on All funding in H1 2026 was directed at regulated crypto firms, marking a significant shift away from permissionless ventures. (Logan Voss/Unsplash)SummaryShow- In the first half of 2026, crypto startups secured $11.2 billion, exclusively benefiting regulated businesses rather than permissionless initiatives.
- The majority of investments were funneled into payments, stablecoins, prediction markets, and trading platforms, primarily from large financial institutions focused on compliance.
- Founders and investors now regard regulatory licenses as critical assets that provide a competitive edge, even as retail trading continues largely on unregulated platforms.
During the first six months of 2026, the crypto sector attracted $11.2 billion, with none of this funding directed towards the permissionless projects that originally characterized the industry.
Irina Heaver, a crypto attorney based in Dubai and founder of NeosLegal, noted, "It’s ironic that it took an $11.2 billion dataset to highlight this issue. The industry emerged with a promise of being permissionless, where money and markets were free from gatekeepers."
Heaver and her team analyzed data that suggests the end of the permissionless era in crypto.
NeosLegal reviewed all publicly disclosed funding rounds from January to June 2026, identifying 377 funding events. The leading sectors in terms of capital raised included payments and stablecoins at $3.7 billion, prediction markets at $2 billion, and crypto exchanges at $1.7 billion, all requiring regulatory approval to function.
"The flow of money has shifted away from permissionless projects and is now targeting regulated businesses," Heaver asserted.
Prediction Markets Lead the Way
Prediction markets exemplified this trend. For instance, Kalshi secured $1 billion in May, with backing from notable investors like Sequoia Capital and Morgan Stanley. Similarly, Polymarket raised $600 million from Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange (NYSE). These prediction markets consistently attracted investment every month in the first half of 2026, totaling 34 funding rounds, Heaver pointed out.
Heaver emphasized the significance of the investors involved, mentioning that firms such as BlackRock, Apollo, HSBC, and Goldman Sachs have all funded regulated crypto companies. For example, Mastercard acquired the stablecoin payment company BVNK for $1.8 billion. Additionally, Abu Dhabi's sovereign wealth fund, ADIA, invested $355 million in Canton Network alongside a16z and Apollo.
Rob Hadick, a general partner at Dragonfly, which invested in Rain, which raised $250 million during this period, commented on the funding direction. He stated, "The current financial flow in crypto is directed towards the future of finance and markets, with companies like Polymarket creating real price discovery for global events, and Rain promoting the mainstream use of dollar-based stablecoins. The industry has matured, and the funding landscape mirrors that evolution."
The Importance of Compliance
Vineet Budki, managing partner at Sigma Capital, elaborated on the valuation mechanics. He remarked, "Licensing has transitioned from being a minor consideration to a crucial factor in business valuation."
He explained that while code can be altered quickly, obtaining a VARA license or MiCA passport can take 18 to 24 months and cost millions before a project can commence operations. "We are investing in the time competitors will take to catch up, not just the product itself," Budki noted.
However, he disagreed with the notion that the data reflects a mere regulatory trend, stating, "This is not just a regulation trade; it's a revenue trade. Regulation serves as the entry ticket."
Gracy Chen, CEO of Bitget, provided a contrasting perspective. She indicated that while institutional funds are pursuing licenses, this only tells part of the story. "The funding data doesn't reveal where users are," Chen explained. "For our tokenized equities, 95% of volume comes from individual traders making small transactions outside the venues that attracted the funding. Institutional and retail interests are diverging."
Heaver clarified that her research methodology counted undisclosed rounds as zero, suggesting that the $11.2 billion figure underrepresents actual market activity. She also noted that six months is a brief overview, and Budki concurred, stating, "One half-year is merely a snapshot; three consecutive halves would better illustrate market structure."
For founders who still view licensing as merely a compliance expense, Heaver had a powerful message: "The prevailing strategy is no longer focused on being 'permissionless.' Instead, it is about being 'licensed in the appropriate jurisdiction.' Your regulatory status is not merely a compliance cost; it is a competitive advantage and increasingly the asset that the market values."
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