The rapid growth of artificial intelligence is starting to affect crypto startups funding, according to several venture capital experts. As AI companies attract huge investment, some capital that once flowed into crypto is now moving toward artificial intelligence projects.
Despite this shift, investors have not completely abandoned the crypto sector. Instead, they are becoming more selective. Venture capital firms now prefer startups that demonstrate strong business models, clear revenue potential, and long-term sustainability.
Investors Now Have More Attractive Alternatives
According to industry analysts, the popularity of AI has changed how venture capitalists evaluate opportunities. Many investors see artificial intelligence as offering faster revenue growth and clearer business outcomes.
Because of this, crypto startups must work harder to attract funding. Founders now need to clearly explain how their projects generate value and how they can survive in a slower market environment.
Experts say this change is pushing crypto entrepreneurs to focus more on practical use cases, monetization strategies, and long-term defensibility.
In other words, crypto projects can still raise capital—but only if they show strong fundamentals.
Crypto Startups Still Attract Billions in 2026
Even with growing competition from AI startups, the crypto industry continues to raise significant investment. According to market data, crypto startups collected about $128 million in funding during the first week of March alone.
So far in 2026, the sector has raised nearly $2.5 billion in total venture funding.
Major investors remain active in the space. Well-known firms such as Founders Fund, Ripple, Y Combinator, Wintermute, and Sequoia Capital continue backing projects that build infrastructure for payments, trading platforms, and decentralized finance.
However, investors are now more careful. They want startups to clearly show how their technology captures value and how it compares with competing investment opportunities like AI.
ARQ Raises $70 Million for Digital Banking Expansion
One of the biggest funding rounds this week went to ARQ, a Latin American fintech company previously known as DolarApp. The startup raised $70 million in a Series B round led by Sequoia Capital and Founders Fund.
This investment highlights growing demand for digital financial services in Latin America. The region often struggles with currency instability and limited access to traditional banking systems.
ARQ currently handles more than $10 billion in annual transaction volume and serves around two million users. With the new funding, the company plans to expand beyond cross-border dollar transfers.
Future products will include wealth management services and high-yield savings accounts in local currencies. The company also plans to rebrand as part of its expansion strategy.
Crossover Markets Secures $31 Million
Another major funding round went to Crossover Markets, which raised $31 million in Series B financing. Tradeweb Markets led the investment, valuing the company at roughly $200 million.
Other investors included Ripple and the crypto trading firm Wintermute. Crossover Markets operates an institutional trading platform called CROSSx. The platform focuses on professional digital asset trading and aims to attract traditional financial institutions.
Unlike many crypto exchanges, the company separates trade execution from custody and market-making services. This structure helps reduce potential conflicts of interest and makes the platform more appealing to institutional investors.
QFEX Raises $9.5 Million for Tokenized Trading
The third notable funding round went to QFEX, a hybrid derivatives exchange that raised $9.5 million in seed funding. The investment was led by Yuri Sagalov from General Catalyst, with support from Y Combinator and investor Paul Graham.
QFEX was founded by Cambridge mathematics graduates and former high-frequency traders from major firms like Citadel and Tower Research Capital.
The platform allows users to trade assets such as equities, commodities, and foreign currencies through tokenized perpetual derivatives. These markets operate 24 hours a day, offering continuous trading opportunities.
The Future of Crypto Startup Funding
The growing AI boom is clearly reshaping venture capital priorities. Some investment capital is shifting away from crypto startups toward artificial intelligence companies.
However, the crypto industry continues to attract funding, especially for projects that build financial infrastructure and institutional tools. Going forward, investors are likely to remain selective. Crypto startups that demonstrate strong value, clear business models, and real-world applications will still find opportunities to raise capital. In a competitive funding environment, innovation and practical utility will matter more than ever.
