Why Crypto VCs Are Pouring Money Into Privacy Technology Now

TLDR

• Venture capitalists invested $588 million in crypto startups during the first two weeks of January 2026.
• Rain led fundraising with $250 million for its stablecoin payment platform, reaching a $2 billion valuation.
• Alpaca secured $150 million for trading infrastructure at a $1.2 billion valuation, backed by Citadel Securities.
• Privacy technology attracted investor interest as institutions require confidential on-chain transactions.
• Indonesian exchange ICEx raised $70 million to expand regulated trading services in Southeast Asia.

Crypto startups raised $588 million in the first two weeks of January 2026, according to data from DefiLlama. The funding marks a strong start to the year for digital asset companies.

Arthur Hayes’ Maelstrom Fund, Revolut’s Vlad Yatsenko, and Citadel Securities participated in the funding rounds. Venture capital firms including Lightspeed, Paradigm, and YZi Labs also invested in various projects.

The money flowed primarily into payments, trading platforms, and centralized exchanges. Investors focused on companies building infrastructure for institutional clients.

Privacy Technology Draws Investor Attention

Privacy technology emerged as a key investment theme. Tim Sun, senior researcher at HashKey Group, said privacy is required for traditional institutions to use blockchain technology at scale.

Investors backed companies working on zero-knowledge proofs, fully homomorphic encryption, and multi-party computation. Privacy-preserving payment systems also received funding.

These technologies allow institutions to conduct transactions without exposing trade details publicly. This prevents front-running and protects sensitive financial information.

Rain topped the funding chart with a $250 million Series C round. The stablecoin payment company reached a valuation of nearly $2 billion.

Rain provides infrastructure for businesses to issue payment cards accepted anywhere Visa operates. The company processes over $3 billion in annual transaction volume.

Western Union counts among Rain’s major partners. The fresh capital will fund international expansion across five continents.

Trading and Exchange Infrastructure Secures Capital

Alpaca raised $150 million in a Series D round at a $1.2 billion valuation. The trading infrastructure firm operates through an API-first model.

The company provides trading, data, and custody services for millions of accounts in 40 countries. Kraken uses Alpaca’s infrastructure.

Alpaca launched several products in 2025 including 24/5 trading and fixed income options. The company also introduced its Instant Tokenization Network and securities lending features.

Indonesian exchange ICEx secured $70 million to expand spot trading services. The platform serves both retail and institutional clients in Southeast Asia.

ICEx operates as a regulated exchange with compliant fiat on-ramps. The exchange competes with international platforms like Coinbase in regional markets.

The funding demonstrates investor preference for established infrastructure over speculative projects. Regional exchanges and stablecoin payment systems led the investment activity.

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