New Delhi, Aug 23 : Amid the tightening regulatory landscape, crypto startups secured $2.3 billion from VC rounds in the second quarter (April-June period) this year, the least amount raised since Q4 2020, a new report showed on Wednesday. Data from BitcoinCasinos.com revealed the substantial deceleration in VC funding within the crypto space. 'The crypto sector is at a pivotal crossroads. While VC funding has historically acted as a catalyst for innovation, the recent downturn signals an urgent need for introspection and adaptation within the industry,' said crypto expert Edith Reads. Several factors underpin this decline in crypto VC funding, notably regulatory concerns. Governments worldwide have assumed diverse positions on cryptocurrencies and blockchain technology, influencing investor sentiment. Regulatory ambiguity has dampened enthusiasm and compelled a reevaluation of investment strategies. 'Furthermore, the inherent volatility of major cryptocurrencies has impacted VC funding decisions. In an industry renowned for its tumultuous market dynamics, investors struggle to balance short-term market conditions with the potential long-term value of blockchain technology,' she added. The sustained decline in VC funding carries significant implications for the crypto industry. Primarily, it could impede innovation as startups find it increasingly difficult to secure the necessary resources for developing cutting-edge technologies. 'This may decelerate the realization of blockchain's transformative potential across various sectors,' said Reads. Moreover, reduced VC funding could intensify competition among startups for the limited pool of available resources. As the sector becomes more crowded, only those with robust value propositions, solid teams, and differentiated offerings will likely attract investors. As for the future of crypto VC funding, its trajectory remains uncertain, though it is likely to remain subdued in the near term. However, if the global economy improves and regulatory concerns ease, a resurgence in VC funding for crypto companies may materialize in the coming quarters, she noted. Several crypto companies have filed for Chapter 11 bankruptcy in recent months like Genesis Global Trading (a subsidiary of the crypto conglomerate Digital Currency Group (DCG), FTX, BlockFi, Three Arrows Capital, Celsius Network and Voyager. US regulators sued Binance and its CEO Changpeng Zhao in June this year for allegedly operating a "web of deception" and filed 13 charges in a federal court. Earlier this month, a US judge removed the bail of Sam Bankman-Fried, former CEO of the collapsed crypto exchange FTX, citing violations like witness tampering. /IANS