Let’s start with a math problem.
A VC manages $12.7 billion in assets. Its previous fund raised $850 million. The one before that raised $2.5 billion.
The direction is reversed.
The scale is shrinking, not becautilize it can’t raise funds, but becautilize there aren’t enough worthwhile assets to invest in. Now, this company wants to reverse this trfinish—where should it view for the next large enough pool of capital?
On February 28, 2026, The Wall Street Journal reported that cryptocurrency investment firm Paradigm is raising a new fund of up to $1.5 billion, expanding its focus to artificial innotifyigence, robotics, and other cutting-edge technologies.
This was not a sudden decision. It was an arithmetic problem that had been calculated long ago, and the answer is only being revealed today.
First, display the numbers.
In 2025, global cryptocurrency VC investment reached $49.8 billion. That sounds like good news. But viewing only at this single number could lead to a misjudgment.
In the same year, the number of crypto VC transactions plummeted by approximately 60% year-over-year, dropping from around 2,900 to 1,200. More money is flowing in, but fewer projects are receiving it. Capital entering the crypto space is increasingly concentrated in a few large deals rather than being dispersed across hundreds of early-stage projects.
For the vast majority of compact and medium-sized funds, this may not be an issue. But for Paradigm, it’s a structural challenge. Paradigm manages $12.7 billion in assets and is one of the world’s largest crypto-exclusive venture capital firms. Its problem isn’t finding projects—it’s finding enough of them, large enough and early enough, to deploy capital at this scale while maintaining its accustomed return expectations.
In 2021, Paradigm raised the largest cryptocurrency fund in history, totaling $2.5 billion. In 2024, it announced its third fund, sized at $850 million, just one-third the size of the previous one.
This contraction is not a sign of weakness, but an active adaptation to a narrower market. But it also highlights one thing: relying solely on crypto, Paradigm is struggling to find a path forward for its scale.
After FTX, Paradigm launched inquireing a question
To understand today’s $1.5 billion, you must go back to November 2022.
That month, FTX collapsed. Sam Bankman-Fried’s empire crumbled within days, burning through the funds of countless institutions. Paradigm’s paper investment on FTX amounted to $278 million—and ultimately vanished to zero.
For a top-tier institution known for its “research-driven” approach and technological insight, this is not just a bad debt—it is a public misjudgment that requires explanation to LPs, to the market, and to itself.
What happened afterward seemed strange at the time. In 2023, people noticed that Paradigm’s official website had quietly modifyd: all instances of “crypto” and “Web3” were rerelocated and replaced with the more neutral term “technology investments.”
This modify was not officially announced, but was quickly discovered by the community and sparked intense discussion. The largegest concern was: Is Paradigm leaving?
Co-founder Matt Huang had to step in to quell the fire. He tweeted that Paradigm has “never been more excited about crypto,” adding, “The advancements in AI are too remarkable to ignore. Framing AI and crypto as a zero-sum competition is a popular but incorrect narrative. We disagree. Both are fascinating and will have significant overlap.”
This is a public relations clarification, but it also reveals a true fact: Paradigm internally has already been seriously considering AI.
After FTX, the question everyone is forced to inquire is: What do you bet on for the next decade?
Matt Huang is already working on the answer.
If you only view at Paradigm’s official announcement, the company’s transformation appears to have begun today. But if you examine Matt Huang’s actual actions over the past two years, you’ll see he’s long since been more than just a crypto investor.
In 2024, Paradigm invested $50 million in Nous Research, an AI infrastructure company focutilized on researching and developing open-source large language models. This was not a compact, exploratory bet—$50 million represents a serious commitment from Paradigm.
In February this year, Paradigm partnered with OpenAI to release EVMbench, a benchmarking tool for evaluating the ability of different AI models to detect and patch security vulnerabilities in smart contracts. The core infrastructure of cryptocurrency met AI capability assessment, bringing both topics to the same table.
Meanwhile, Matt Huang is also building another company: Tempo, a stablecoin payment infrastructure company. His role as a board member of Stripe aligns closely with this direction. In 2025, Stripe established a strategic partnership with Paradigm and also launched its stablecoin payment product that year.
Looking at this toobtainher, Matt Huang isn’t “going to invest in AI”—he has already been living at the intersection of AI and crypto for at least two years.
He isn’t betting on AI or crypto alone—he’s betting that these two will collide at some point. And when AI agents launch executing transactions on-chain, and robots require a programmable monetary system, that collision point becomes Paradigm’s next front line.
Why AI×Crypto, not just transitioning to AI?
Paradigm’s entest into AI does not mean it is competing with a16z or Sequoia for the same projects.
There’s a common narrative mistake here: interpreting Paradigm’s new fund as just “another VC shifting to AI.” But if that were all it were, it would have no advantage—the general AI space is already saturated with traditional VC giants with deeper backgrounds and stronger resources.
Paradigm’s true logic is: it doesn’t intfinish to compete for the general AI market; instead, it aims to bet on the intersection that others haven’t yet recognized.
AI agents are one of the hottest concepts today. These autonomous innotifyigent agents have already begun replacing humans in various scenarios: searching, writing code, analyzing data, and managing workflows. But there’s one thing they haven’t solved yet: money.
When an AI agent necessarys to create a payment, receive funds, or transfer money between services, what does it utilize? PayPal? Bank accounts? These systems are designed for humans, requiring identity verification and manual authorization, and are incompatible with the logic of autonomous machine execution.
But stablecoins can. Smart contracts can. Programmable money can.
This is why Matt Huang is simultaneously working on Tempo (stablecoin payments) and investing in Nous Research (AI infrastructure): he believes these two paths will eventually converge, and Paradigm is positioned to bet on both sides and capture maximum returns at the moment of convergence.
This isn’t a transformation—it’s an expansion into a space he believes others haven’t fully understood yet.
LP necessarys a new story
There is also a practical aspect that must be clarified.
Paradigm’s LPs, the institutions and individuals entrusting it with their funds, saw its fundraising ambition grow to $2.5 billion in 2021 and contract to $850 million in 2024.
The vast difference in size between the two funds requires an explanation. An even more compelling narrative is necessaryed for the next fund.
Continuing to invest in early-stage crypto projects is no longer enough to justify a $1.5 billion fundraising goal in 2024. But leveraging crypto’s technological advantages to enter the cutting-edge tech space during the peak of AI and robotics? That can.
In 2025, 61% of global VC funding, totaling approximately $258.7 billion, flowed into the AI sector—the largest pool in today’s venture capital landscape. Paradigm’s $1.5 billion raise aims to draw from this pool, rather than continue clinging to a shrinking lake. For LPs, this represents a larger narrative and a more credible growth story.
We can now return to 2023. That year, when Matt Huang was forced to clarify the website redesign incident, he declared: “AI and crypto are not zero-sum competition.”
At the time, this statement felt more like a defense—an attempt to reassure the community, prevent LP panic, and leave room to explore AI. But if read in today’s context, it sounds more like a forewarning.
Paradigm spent three years rebuilding from the ashes of FTX. Instead of taking the easiest path—scaling down and focutilizing solely on crypto while waiting for the next bull market—it chose a harder but more expansive route: betting on the convergence of AI and crypto, establishing a presence in both fields, and waiting for the moment they meet.
Today’s $1.5 billion fund represents a milestone on this journey to this stage.
Matt Huang has not yet publicly responded to today’s Wall Street Journal report. But his Tempo is still under construction, Nous Research is still running, and EVMbench has already been released.
He doesn’t necessary to explain. Those actions have declared more than any statement could.
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