Joanna Liang Of Jsquare: Real Financial Adoption Will Drive Crypto’s Next Wave, From Stablecoins To Tokenized Assets

The crypto enterprise market is recovering, however the rebound is more and more concentrated in established firms: Galaxy Research says VCs deployed $5.6 billion throughout 384 offers in Q2 2026, with 78% of capital going to later-stage startups, whereas solely 5 new crypto enterprise funds have been raised, the bottom quarterly depend since Q3 2019. Yet Joanna Liang, Founding Partner at Jsquare, sees the shift otherwise from a traditional market slowdown, arguing that it represents a reset that may create alternatives for devoted early-stage buyers fairly than a decline in innovation.

This interview explores why Jsquare is sustaining its Web3 focus whereas a lot of the enterprise business turns towards AI, how Joanna Liang evaluates founders and rising sectors, and why she believes international on-chain finance might develop into a core a part of the monetary system over the following 5 to 10 years.

Capital rebounded in Q2, however it went primarily to later-stage firms, and the variety of new enterprise funds raised was the bottom since 2019. How do you learn this from the place of an early-stage fund? Have you made new investments in current months, and in what areas?

I see this as a market reset fairly than a decline in innovation. AI has attracted vital capital and expertise, and lots of crypto VCs have shifted their focus. That creates alternatives for devoted early-stage buyers like us, as a result of we face much less competitors and extra engaging valuations. That is what I’ve seen over the previous two years.

Since launching our $50 million fund in 2025, Jsquare has invested in 17 Web3 initiatives, usually with checks of round $1 million. They deal with on-chain buying and selling, lending and borrowing, RWA, prediction-market settlement and comparable areas. We have additionally invested in later-stage firms similar to Kraken and BitGo, with bigger checks of over $5 million per undertaking. I consider the following wave of crypto progress will probably be pushed by actual monetary adoption, not simply token hypothesis.

Many funds have pivoted to AI currently. Where does AI match inside your Web3 focus?

Jsquare’s focus stays on Web3. Even when investing in AI-related firms, we search for firms that resolve issues inside the Web3 ecosystem. A current instance is Nebula Security. Its thesis is that AI makes cyberattacks extra refined, and the rising quantity of capital held on-chain will create vital demand for safety options. Our staff approached them proactively. We invested as a result of they handle on-chain safety issues. 

They have already uncovered a number of vital vulnerabilities, together with however not restricted to:

• More than 700 Linux kernel zero-day vulnerabilities;
• More than 10 Chrome and Firefox zero-day vulnerabilities, and so forth.

Among the investments from Jsquare’s first years, that are you most happy with? How has your method modified since then?

It is difficult to select only one. I began Jsquare in 2021 with my very own capital and have invested in over 100 initiatives to date. My technique has developed round two complementary alternatives.

The first is regulated monetary infrastructure, similar to Circle, CoinList, FV Bank, Kraken and BitGo. I consider credible, compliant establishments are important for bringing crypto to mainstream adoption. The second, which excites me extra, is monetary and technological innovation. Pudgy Penguins, Metis and Big Time have proven how bold founders can maintain adapting and exploring new alternatives in Web3.

In our new fund, we invested on the earliest stage in Mog, a perpetual DEX much like Papertrade. It lets customers commerce shares and crypto property with 1,000x leverage.

What I’ve realized from all these initiatives is that nice founders matter greater than their unique enterprise plans, as a result of they will modify product plans and discover new product-market match as market situations change.  

Which founder traits do you search for which can be onerous to see in a pitch? Which have proved most predictive?

Three: integrity, real ardour for the mission, and adaptableness.

Integrity comes first. I’ve realized from previous investments {that a} sensible founder with out integrity could be a very expensive mistake for a fund. On ardour, I like founders who really love what they’re constructing, not simply chasing the following sizzling narrative. Narratives change quick, and you can not construct one thing lasting with out real ardour. Adaptability has been one of many strongest predictors. Markets change very quick, particularly in crypto, and the very best founders can admit what they did flawed, study rapidly and pivot.

How do you distinguish a short-term pattern from a sturdy enterprise? Which early alerts do you depend on?

I begin with a easy query: will individuals nonetheless use this product after the hype has gone? For on-chain finance, which is my essential focus now, I take a look at actual customers, retention, transaction quantity, income and safety. If individuals maintain coming again with out token incentives, that may be a robust signal of product-market match. I might name {that a} sturdy enterprise that may get by means of bear and bull markets.

I’m extra cautious about blockchain-based AAA gaming, social apps and purchasing. They want seamless consumer experiences, and blockchain doesn’t but add sufficient worth in these sectors.

Meme tokens are the largest attention-grabber amongst retail buyers, and I discover them very attention-grabbing. I consider meme buying and selling is a recurring phenomenon: each cycle, consideration returns, many tokens rise, and other people maintain buying and selling. But most particular person meme tokens are short-lived. Attention will at all times come again, however the hype round every token often doesn’t final. Real demand can create sturdy companies. Catching consideration for a short time creates solely momentary alternatives.

When you consider an funding, how a lot weight do you give the undertaking itself in contrast with its atmosphere, together with regulation, jurisdiction and market timing? What provides you sufficient confidence to commit?

It relies on the sector. For funds and different regulated monetary companies, jurisdiction, licence and banking entry come first. Without them, funds is a dangerous enterprise, and even a fantastic product can not scale and not using a viable regulatory path. For modern on-chain merchandise, I place extra weight on the staff and the underlying mechanism. Take Mog, which I discussed: it explores a unique mannequin for leveraged buying and selling and liquidity provision. Its core innovation is a treasury that builds liquidity from buying and selling exercise, enabling markets to function with out conventional order books or exterior market makers. I discover such monetary innovation fascinating as a result of it may create fully new sources of alpha.

Ultimately, what provides me confidence is a powerful staff, an actual market want and a compelling risk-reward. I’m keen to take know-how danger, however to not compromise on integrity or settle for structural danger.

Which traits throughout AI + Web3, PayFi, DeFi and RWA do you anticipate to matter most over the following 12 months? Is Jsquare planning so as to add or drop any verticals?

I’m very bullish on international on-chain finance over the following 12 to 18 months, particularly stablecoin funds, on-chain buying and selling, lending and borrowing, and prediction markets. I believe these sectors will see the quickest adoption, with regulation in place within the US. I’m additionally very enthusiastic about AI-powered safety: as extra capital strikes on-chain, safety turns into extra essential.

Traditional finance is shifting on-chain very quick, and RWA is an enormous matter with enormous long-term potential, particularly tokenized shares. When I final learn the info, that they had reached round $3.4 billion, and I anticipate them to develop exponentially over the following few years. Growth could also be slower for non-standardized RWA merchandise similar to actual property and native on-chain merchandise, as a result of liquidity and distribution are nonetheless large challenges there.

Custody is rising too, and controlled custody is one other large theme. BitGo, one in every of our portfolio firms, has over $65 billion in property on its platform. We additionally invested in Walapay, a PayFi enterprise that connects stablecoins with conventional banking programs for quicker, cheaper cross-border funds. The firm introduced a number of months in the past that it had already processed $2.5 billion.

I’m not planning to drop any main verticals. I’ll focus extra capital on areas exhibiting actual adoption, robust income progress and clear worth seize.

What time horizon do you intend round, from first funding to return, and is 5 years lifelike?

This is a five-year fund, so my objective is to return capital to buyers inside 5 years. From a broader perspective, I might like to see some initiatives survive not less than two or three market cycles, which is 5 to 10 years.

Crypto investments can exit by means of token liquidity, acquisitions or public listings. Which exit route do you anticipate to matter most for the portfolio? What would depend as a profitable end result?

Our portfolio spans a spread of potential exit routes. Jsquare takes a long-term funding method, with exit alternatives relying on every firm’s improvement, market situations, and obtainable liquidity occasions. For early-stage DeFi and on-chain finance merchandise, token liquidity will seemingly be the principle route. For funds, safety and AI + Web3 startups, similar to Walapay and Nebula Security, we see potential for strategic acquisitions or eventual IPOs over the long run. We have already seen Circle and BitGo have gone public, and I’m wanting ahead to a possible Kraken IPO.

Success means two issues to me. First, delivering actual returns to my LPs and outperforming Bitcoin over this market cycle. Second, seeing portfolio firms resolve actual issues and maintain themselves for not less than 5 to 10 years, staying related for years to return.

Suppose capital weren’t a constraint and you could possibly write a examine far bigger than your common dimension into one firm with a five-to-seven-year horizon. Which type of firm would you select? Why?

For larger-scale crypto publicity, Bitcoin would at all times be my first selection. Among different property or firms, I might decide a market chief in on-chain finance, particularly in buying and selling or lending, similar to Uniswap and Aave, that are already the largest leaders of their sectors. I consider on-chain monetary exercise will develop massively over the following 5 to 10 years, particularly when US regulation turns into clearer and extra real-world property transfer on-chain. I wish to personal a significant stake in such leaders, as a benchmark not less than 2% of complete FDV.

Looking forward three to 5 years, what are Jsquare’s priorities? What funding thesis would you like the agency to be recognized for?

Over the following three to 5 years, my precedence is to construct a powerful monitor file by figuring out and backing distinctive early-stage firms, whereas working towards significant returns and distributions for our LPs from our first fund. We nonetheless have capital to deploy, and we consider disciplined investing and powerful efficiency ought to come earlier than any new fundraising.

Our long-term funding thesis is international on-chain finance. I consider crypto will reshape how worth is owned, transferred, and accessed. Stablecoins and tokenized real-world property will develop into core infrastructure for international finance, and we would like Jsquare to be on the forefront of this transformation.

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