After a summer characterized by cautious investor sentiment and shifting priorities across the sector, new figures indicate that capital flows into the crypto space are beginning to cool. Overall funding for crypto protocols saw a significant decline of 30% in August, dropping to nearly $2 billion from July’s $2.67 billion, as reported by DeFiLlama.
Funding Dips Yet Quarter Gains
Despite the monthly slowdown, the total funding for the third quarter reached $4.57 billion in just two months, slightly surpassing Q2’s total of $4.54 billion. This indicates that while monthly capital inflows may appear subdued compared to peak levels, investor interest remains. At the beginning of 2022, monthly raises hovered around an impressive $7 billion, but the market has seen a gradual decline since then. Nevertheless, 2025 has exhibited notable spikes that have kept investors engaged and alert to opportunities.
Investor Focus Shifts To Existing Projects
Market analyst Daan Crypto Trades notes a shift in funding dynamics, suggesting that investment is now increasingly directed toward established projects rather than new-chain launches. According to Daan, the current trend favors treasuries and teams that are actively building and expanding on existing platforms, which have maintained their relevance during this downturn in new launches.
The Total Funding Raised for new Crypto projects has seen an increase the past few months but is nowhere close to what it was back in 2021 & 2022. This cycle has been all about treasury companies which are building on top of projects that are already out there.
Most capital… pic.twitter.com/nqo25QxVUo
— Daan Crypto Trades (@DaanCrypto) September 11, 2025
Investments Spread Beyond DeFi
While DeFi captured a significant portion of the investment landscape, August also saw money flowing into various sectors. Infrastructure and trading platforms attracted notable investments, and stablecoin infrastructure remained robust, highlighted by Rain’s successful raise of $58 million. Additionally, payment solutions garnered attention, with OrangeX securing $20 million in a Series B funding round.
South Korea Opens VC Doors
In a notable regulatory development, South Korea announced the lifting of its long-standing venture capital funding ban for crypto firms as of September 16. Following an approval from the State Council and cabinet, the Ministry of SMEs and Startups made this significant amendment, removing the classification that had labeled exchanges and brokerages as “restricted venture businesses” since October 2018.
Government Support Could Boost Local Firms
This regulatory change is underpinned by recent laws, including the Virtual Asset User Protection Act passed in July 2025, which introduced measures like deposit safeguards and bans on unfair trading. Policymakers have articulated a vision for a more transparent and responsible crypto ecosystem, aimed at reconnecting venture capital to companies focused on blockchain and cryptography.
With the removal of these restrictions, local crypto firms may find themselves with new sources of growth capital, while investors increasingly seek out projects geared toward delivering long-term value. This shift could lead to a revitalization of the local crypto landscape, encouraging innovation and expansion in a once-stagnant sector.
Featured image from Unsplash, chart from TradingView
