Unveiling the $11.2 Billion Funding Flow in the First Half of the Year: The Most Valuable Asset in the Crypto Industry Is Shifting from Code to Licenses

Original author: Xiaobing

Dubai crypto lawyer Irina Heaver and her team at NeosLegal did something simple yet powerful: they went through every publicly disclosed crypto industry funding round in the first half of 2026, a total of 377 deals worth approximately $11.2 billion.

The conclusion is a single sentence: every disclosed funding round went to businesses that require regulatory licenses to operate.

The top three sectors were: payments and stablecoins at $3.7 billion, prediction markets at $2 billion, and exchanges and trading platforms at $1.7 billion. These three areas share a common characteristic—in any major jurisdiction, legal operation requires a license.

Institutional capital's valuation logic for the crypto industry has shifted from "what code can do" to "do you have a license."

Who Is Writing the Checks

First, let's look at who's paying.

Kalshi completed a $1 billion funding round in May, with investors including Sequoia, Morgan Stanley, Ark Invest, and a16z. Polymarket raised $600 million, led by Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange. In the prediction market sector alone, 34 funding rounds were completed within six months.

Within the $3.7 billion flowing to payments and stablecoins, the names BlackRock, Goldman Sachs, and Persian Gulf sovereign wealth funds appear repeatedly.

Vineet Budki, managing partner at Sigma Capital, put it bluntly: regulatory licenses have shifted from a compliance footnote to a core valuation metric.

Behind this assessment lies cold, hard arithmetic. A MiCA license or a Dubai VARA permit typically takes 18 to 24 months to obtain, costing millions of dollars. Code can be forked in a weekend; a license cannot. When VCs evaluate two functionally similar projects, the licensed one naturally holds a moat that competitors cannot quickly replicate.

The License Is the New Moat

Let's put this phenomenon on a longer timeline.

In 2020-2021, the dominant theme in crypto funding was protocols and infrastructure. Public chains, DeFi protocols, and NFT platforms absorbed most VC capital. The investment logic was technical barriers and network effects—whoever had the highest TVL and the most active developer ecosystem was worth the most.

In 2022-2023, the bear market washed out a wave of narrative-only projects, and funding began tilting toward businesses with actual revenue. Exchanges, wallets, and infrastructure companies saw their share of funding rise.

The first half of 2026 shows this trend reaching its logical endpoint: capital is no longer paying for technological innovation itself, but for the ability to operate technological innovation within a compliance framework. Simply put, code is a necessary condition, but a license is the sufficient condition.

This closely mirrors the evolution path of traditional finance. Fintech companies raised capital on technological disruption in the early 2010s, but by the late 2010s, they were raising on licenses and compliance capabilities. Stripe is worth hundreds of billions of dollars, and its core moat is its ability to operate compliantly in over 40 countries—far beyond any technical gap in payment APIs.

The crypto industry is walking the same path, just faster.

Funding Flows and User Activity Are Diverging

But this data has a significant blind spot: it only counts funding, not users.

On-chain data shows that DeFi protocols' TVL, DEX trading volumes, and active addresses all grew in the first half of 2026. The daily active users and trading volumes of permissionless protocols like Uniswap, Aave, and Jupiter have not shrunk just because VC money is no longer flowing to them. Retail users are still trading, lending, and providing liquidity on-chain.

What's happening is a more subtle divergence, not the "death of permissionless protocols": institutional capital is flowing into compliant, licensed centralized businesses, while retail user activity remains distributed across permissionless on-chain markets. Money and people are moving in two different directions.

This divergence is most visible in prediction markets. Kalshi and Polymarket both operate prediction markets, but Kalshi is a CFTC-registered exchange, while Polymarket has no license in the U.S. Kalshi raised $1 billion with Morgan Stanley's backing; Polymarket raised $600 million with ICE's backing. Both are moving toward compliance, but their user bases and product experiences still differ significantly.

A Redefinition of What's Valuable

Heaver used a precise phrase in an interview: capital is no longer chasing the permissionless; it's chasing regulated businesses.

The deeper implication of this shift is that "what counts as a valuable asset" in the crypto industry is being redefined. In 2021, the most valuable asset was a widely forked smart contract protocol. In 2026, the most valuable asset might be a MiCA e-money license covering all 27 EU member states, or an entity with a financial services license in Abu Dhabi's ADGM.

Code still matters. But code answers the question of "what can be done," while a license answers "what are you allowed to do." When $11.2 billion in institutional capital votes with its feet to tell you the latter is scarcer and more valuable, the center of gravity in this industry has already shifted.

For developers, this isn't necessarily bad news. Permissionless protocols don't need VC money to operate—they have token incentives, communities, and on-chain revenue. But for founders, the funding reality of 2026 is already clear: if you want institutional money, get a license first.