Funding Wrap: Y Combinator wants more stablecoin startups

Plus, crypto secured $1.9 billion in funding last quarter and Ripple acquires a custody provider

article-image

PH German Alvarez/Shutterstock modified by Blockworks

share

The startup incubator Y Combinator issued its latest “request for startups,” listing 20 ideas it would “like to see more people working on.”

Unsurprisingly, the list heavily featured AI, but it also had a crypto-related pitch — stablecoin finance. Stablecoins are tokens pegged to the prices of fiat currencies, usually the US dollar. Stablecoin issuers often accrue yield on the reserves backing the tokens — a practice that can be highly profitable.

Stablecoins can easily move across borders while avoiding fees and fraud, and their “utility is so straightforward it seems inevitable traditional finance will follow suit [behind startups already using stablecoins],” Y Combinator group partner Brad Flora wrote.

Read more: Tether made nearly $1B in monthly profit during Q4

Y Combinator is a San Francisco-based startup incubator that guides founders through the early stages of their project before making a seed investment in the company. The incubator is known for being among the first backers of some wildly successful startups — including OpenAI, Airbnb and Reddit.

It also counts some crypto heavyweights as alumni, including Coinbase, OpenSea, and Protocol Labs; the company behind Filecoin and IPFS. 

In his blurb on stablecoins, Flora said “it seems clear that stablecoins will be a big part of the future of money.” Flora likened the future adoption of stablecoins to once-illegal music file sharing becoming big business vis a vis Spotify and Apple.

Read more: PayPal Ventures uses its stablecoin for investment in crypto transfer platform Mesh

Some crypto users on social media were slightly surprised but heartened by Y Combinator’s stablecoin embrace. 

“Respect to @ycombinator for coming around to it. Stablecoins are one of the few trillion dollar industries,” Sam Kazemian, founder of the decentralized stablecoin Frax, wrote on X. 

Crypto firms secured $1.9 billion in funding last quarter: PitchBook

Venture capital activity, typically a lagging indicator of crypto market performance, has been turning around. A report on Q4 fundraising from data platform PitchBook found crypto closed 326 deals last quarter totalling some $1.9 billion, a 2.5% increase from Q3. 

Venture activity towards the end of 2023 was buoyed by a series of nine figure rounds, including Wormhole’s $225 million raise at a $2.5 billion post-money valuation

Read more: Lava Network heats up the node landscape with market forces

PitchBook’s data shows there was $9.3 billion in crypto venture funding last year overall, down from $24.8 billion and $29.2 billion in 2021 and 2022. 70 VCs exited their investments last year, taking $1 billion with them, according to the report.

Other notable fundraises

  • New crypto venture firm RW3 Ventures announced a $60 million fund.
  • MetaStreet raised $25 million to build liquid credit tokens, an on-chain debt capital tool for NFTs. 
  • Former FTX US exec Brett Harrison raised $12 million for his institution-focused new venture, Architect.
  • Armistic Capital purchased shares totaling $6 million in value in Bitcoin mining firm Greenidge. 
  • Modular blockchain network LAVA announced a $15 million seed round led by Jump Capital, Hashkey Capital and Tribe Capital.
  • Ripple acquired the custody provider Standard Custody & Trust.

Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.png

Research

USDai is a synthetic dollar fully backed by tokenized three‑month T-bills custodied by M^0. When holders stake USDai in an ERC-4626 vault, they mint sUSDai, which finances short-term, amortizing loans secured by NVIDIA-class GPUs and servers.

article-image

The stablecoin bill now heads to the president’s desk

article-image

The House on Thursday passed the CLARITY Act, a landmark cryptocurrency market structure bill

article-image

Interchain Labs will focus on sovereign L1s and institutional demand, abandoning plans for smart contracts on the Cosmos Hub

article-image

Also, only three tokens have outperformed bitcoin so far this year: XMR, HYPE and SKY

article-image

The fund group has submitted proposals in recent months for other funds that would hold litecoin, solana, XRP, HBAR, Sui and others

article-image

Momentum’s back — BTC leads, risk assets follow