As large crypto VCs expand into fields such as robotics and physical AI, questions are often raised about whether crypto venture capital is finished in the cryptocurrency arena.

Imran Khan (임란 칸), a general partner at crypto accelerator Alliance, said in a recent post shared on social media platform X (Twitter) that “crypto VC is still needed, but it will not last very long.”

He said it was a view most people agreed with at a limited partner dinner gathering he attended a few days ago. He predicted that after the crypto market goes through one or two more up and down cycles, crypto will blend with other advanced technology areas such as AI and robotics.

Large VCs are turning to frontier tech because their funds have grown so big that it is hard to hit target returns with crypto alone.

Khan said investment opportunities in crypto are narrower than he thought in 2020. “You cannot put $1 billion to $3 billion into crypto alone and expect the same returns as before,” he said. “For a $2 billion fund to generate a 3 times return, it has to return $6 billion. Those numbers are only possible if you create several $10 billion to $50 billion successes while holding a meaningful stake,” he said.

In the past, infrastructure projects such as layer 1 (L1) blockchains absorbed that scale. Now value is concentrating in apps with distribution networks or in existing companies. As large companies with many customers easily adopt blockchain technologies such as stablecoins, there is less room for startups. In this process, more startups are selling their companies, merging with others or changing business direction.

He called it “a healthy process,” even if it could look like a bearish signal.

The market’s character has also changed. Blockchain companies are increasingly clustering around Wall Street and banking, payments and fintech. The market has become much larger, but compared with a few years ago when crypto seemed like it would change everything, the stage has narrowed, he said. Khan pointed out that crypto grew rapidly when interest rates were at the floor and money was abundant in markets. “As token prices rose, we thought the future we drew was correct, but it did not necessarily unfold that way,” he said.

A talent outflow is also becoming more pronounced. Young developers who would once have read crypto papers and built blockchain projects are now moving to AI and robotics. Even so, he said he does not see it as a brain drain. “If you look at Alliance data, there are more existing crypto talents who leave big companies to start businesses than there are in the younger cohort,” he said.

He does not view the trend itself negatively, with crypto combining with other advanced technology fields and the number of crypto specialist VCs declining. “Crypto has given fintech new opportunities through stablecoins and tokenisation, and now AI companies are adopting crypto infrastructure through agent payments, wallets and agent trading,” he said. He added that financial services that run on blockchain without banks, known as DeFi, or services where AI invests on users’ behalf, have yet to exceed a few million users. He also said trading stocks by turning them into blockchain tokens has not spread in emerging markets. “It takes about 30 years for a new technology paradigm to mature. The highest multiples come in the first third, the biggest money is made in the next third, and at the end the industry consolidates around winners. We are now in the second stage,” he predicted.

In short, he expects crypto specialist VCs to retain their strengths, like fintech specialist VCs, but says there does not need to be as many as there are now. Khan said, “LPs were not pessimistic about crypto. They were looking forward to opportunities that will emerge as crypto grows and becomes intertwined with new fields.”