From fairy tales of making fortunes to a compliance prison cage
That summer of 2021: a programmer could sell a monkey avatar written in three days for over a million dollars; a freshly graduated college student could become a ten-millionaire overnight by issuing tokens. That was crypto’s “adolescence”—hormones raging, rules in chaos, and everyone believing they could become the next legend.
Five years later, the industry puts on a suit, ties on a tie, and sits at a desk in an office on Wall Street.
20 million tokenized assets are burned to ash; the project teams that once dominated Twitter all disappear at once. Countless retail traders who chased the price sit staring at their accounts in the dead of night. Over five years, the crypto industry completes the same maturity path that traditional finance took two hundred years to walk—from unrestrained growth to oligarchic monopoly, from anyone can participate to licenses rule supreme.
This isn’t decline. It’s a quiet “blood transfusion.”
Act 1: The Dusk of the Entrepreneurs
VC money no longer belongs to dreamers
In 2025, total global crypto VC investment recovered to $20 billion—sounds lively and exciting. But tear open the data to see the truth: seed rounds and Pre-seed rounds account for only 5.2% of all funding, while 57% of the money flows to already public companies.
What does that mean?
This means that if a young team with a genius idea walks into VC doors in 2026 with a white paper, it will most likely be politely asked to leave. VC will say, “Come back when you have a license,” or “Come back when you have a million users.” But the problem is this—without money, you’ll never have licenses and users.
After Dragonfly’s managing partner Hadick completed fundraising of $650 million, he said one line—precise like a scalpel: “a large-scale extinction event.”
This isn’t a metaphor—it’s real happening. a16z’s $2.2 billion Crypto Fund 5, with Chris Dixon clearly stating they no longer invest in early-stage protocols. Paradigm’s new $1.5 billion fund is already looking toward AI and robots. Early crypto innovation has become the last cold dish removed from a capital feast.
Put it in SVB’s data: for every $1 of VC money invested in crypto in 2025, $0.40 flowed to companies also working on AI, whereas in 2024 the ratio was only $0.18. Crypto is becoming an “accessory” to AI—not the main character.
Entrepreneurs’ threshold: from “writing code” to “passing licensing”
The crypto startup path in 2017: write a white paper, deploy smart contracts in three days, create a group on Telegram, and raise dozens of ETH within days.
The 2026 crypto startup path: spend $750,000 to $1.2 million to complete multi-state compliance in the U.S., then prepare €50,000 to €150,000 to meet the EU MiCA minimum capital requirement, hire a compliance team that burns $2 million per year, wait for BitLicense approval for more than a year, and only then launch the first product.
Time cost from zero to one: from days to years. Funding cost from zero to one: from thousands of dollars to millions.
This isn’t entrepreneurship. It’s buying an entry ticket—and the ticket is going up in price.
Act 2: The “arms race” of licenses in the era of M&A
Spending $3 billion buys not code, but a piece of paper
In 2025, the total global crypto M&A deal value reached $37 billion, up more than 7x year over year. But everyone is scrambling for the same thing—licenses.
Coinbase buys Deribit for $2.9 billion → acquiring derivatives-brand coverage
Kraken pays $1.5 billion to get NinjaTrader → buying a futures license and its customer base
Ripple acquires Hidden Road for $1.25 billion → buying institutional distribution channels
Mastercard buys BVNK for $1.8 billion → traditional finance directly buys crypto payment capabilities
All these trades have a common point: buying technology costs only a fraction, while buying licenses costs everything.
The most valuable thing in the crypto industry is no longer the tens of thousands of lines of smart contracts in a codebase, but a piece of paperwork issued by the government. Whoever gets the license first can claim land within the compliance walls; whoever can’t gets locked out the door.
Traditional finance’s “bargain-basement moment”
In 2026, ICE, the parent company of the NYSE, invested in OKX at a $25 billion valuation and secured a board seat—so OKX users in the future can trade tokenized NYSE-listed stocks.
This isn’t a crossover—it’s a whale swallowing prey.
BlackRock issues tokenized funds on Ethereum; Franklin Templeton does tokenized treasuries on-chain; Stripe is pushing stablecoin payments. Traditional financial giants don’t play technology competitions. They buy compliance tickets outright, then turn crypto-native players into their own “technology outsourcing providers.”
The crypto industry has shifted from “disrupting banks” to “becoming a supplier to banks.”
Act 3: Who’s truly making money?
The shovel-sellers are richer than the gold diggers
Crypto is a world of extremes: ahead lies a brutal battlefield where countless projects go to zero; behind are the quiet cash-register sounds of Chainalysis and the like.
Chainalysis: helps exchanges with on-chain anti–money laundering; raises $538 million; annual revenue $250 million
Sardine: identity verification and transaction risk control; raises $145 million
Backed Finance, Ondo Finance: hold traditional financial licenses, providing the underlying issuance and custody for tokenized assets
The stricter the regulation, the higher the compliance cost—so these “shovel-seller” companies make even more. They don’t bet on bull markets or bear markets; they only bet on one thing: the government will not relax regulation. In this bet, the win rate is close to 100%.
The “delivery disaster” of tokenized U.S. stocks
In June 2026, SpaceX went public; Binance, Bybit, Bitget, and MEXC all promised users tokenized stocks at the IPO price. What happened? None of them delivered any underwriting allocation—everything failed to be delivered.
The only thing that can be delivered is holding a broker license—Backpack—and Ondo and Dinari, which from the outset made it clear they are trading at secondary-market prices.
This story compresses the state of the entire industry: licenses determine delivery capability, delivery capability determines credibility, and credibility determines survival.
Act 4: After Bitcoin ETFs, the era of retail ends
The breakdown of three conditions
The wealth effect in crypto’s early days rests on three pillars:
Zero barriers: anyone can issue tokens, and anyone can participate
Information parity: retail and institutions see roughly the same information
Severe pricing distortion: many asset prices are far below or far above their reasonable value
In 2017, invest $10,000—dozens of times returns was pretty normal. Back then, a Meme coin could surge from zero to a market cap of hundreds of millions of dollars with just one tweet from Elon Musk.
But everything changed after Bitcoin ETFs were approved in January 2024.
Bitcoin is officially folded into the dollar-denominated pricing system—turning it into a financial asset bought and sold with dollars, and measured by dollars, just like Apple stock or Tesla. Bitcoin’s price volatility is moving closer to that of long-term growth tech stocks; crypto’s “independent trading narrative” is fading away.
Retail investors’ return expectations are dropping year by year too. Those who entered at the peak lost everything; latercomers watched Bitcoin fall from 150,000 to 80,000, then rise back to 120,000, and realized it’s not much different from炒American stocks.
A compliance “moat” where winners take all
Today’s crypto industry landscape:
Category one: Coinbase, Kraken, Ripple—licensed giants that widen their moat through M&A
Category two: a16z, Dragonfly, Paradigm—top-tier VCs investing only in already-validated directions like stablecoins, RWA, and AI agents
Category three: BlackRock, Mastercard, ICE—traditional finance that enters directly with licenses and capital
The shared feature of the three types of players is: none of them is eating from “technical innovation.” They all eat from “compliance barriers.”
The final window: does crypto-native still have a chance?
The paradox of Pump.fun
Crypto-native isn’t completely without new stories. Since Pump.fun launched, it has minted more than 18.67 million tokens, and Trojan’s cumulative trading volume has reached tens of billions of dollars. They’re rare cases where a few people can write code and still build something huge.
But the way they succeed itself reveals a deep paradox: they’re not innovators in the industry—they provide more efficient pipelines for other people’s speculation.
Pump.fun doesn’t issue tokens or build projects—it builds the infrastructure for token issuance. It’s like selling shovels during a gold rush: the ones truly making money aren’t the miners who dig up gold, but the blacksmith who sells shovels to all the miners.
The final five directions
Today, startup directions that can attract top-tier VC funding concentrate in five areas:
Stablecoin payment infrastructure
Tokenized RWA
On-chain execution layer for AI agents
Institution-grade DeFi tools
Compliance technology
Their shared traits are: capital-intensive, license-intensive, long cycles, and linear returns.
VCs now hardly look at whether “this protocol has innovation,” but instead ask: “Are institutional customers willing to use it?” and “How deep is the compliance moat?” The innovation window at the protocol layer is basically closed; the L1 landscape is set; new public chains have almost no chance.
Innovation migrated to the application layer and the compliance infrastructure layer, but the pace is completely different—back in 2017, writing a smart contract could create a new market; in 2026 you need to spend several million dollars first to get a license, then several more million on compliance, before you can launch your first product.
Epilogue: After crypto comes of age, where does the road lead?
Crypto is like an 18-year-old boy suddenly pushed into a 30-year-old position. It puts on a suit, ties on a tie, and sits at a desk in the financial system. The hormones of adolescence are still there, but the body is already constrained by rules.
When the entry threshold becomes as high as traditional finance, when the winners are companies with licenses and banking relationships rather than teams with the best technology, and when M&A replaces open-source competition as the main way the market consolidates—then the industry’s value-allocation logic is already fundamentally no different from traditional finance.
But crypto’s allure has never disappeared.
After every bout of confusion, crypto always ushers in a new peak. After the collapse of Mt. Gox in 2014, Ethereum rose; after the deep winter of the 2018 bear market, DeFi Summer exploded; after the FTX blowup in 2022, Bitcoin ETFs brought fresh institutional capital.
For those still in the industry, the choice is very clear:
Either embrace the changes right now—go get licenses, do compliance, do institutional business, and create a digital twin for traditional finance. This path is certain but slow, makes money but isn’t fun.
Either go explore the next crypto domain full of randomness—where there may still be undefined new paradigms, barren lands not covered by regulation, and opportunities for ordinary people to turn their lives around overnight. But it’s uncertain—dangerous, and anything could go to zero at any moment.
Crypto has never had a “middle state.” Either you become a licensed player inside the compliance walls, or you become an explorer outside the walls searching for the next explosion point.
In 2026, the coming-of-age ceremony is over. Choose your role and accept the price.