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%Cryptocurrency venture capital funding is likely to rise this year due to regulatory clarity and friendly policies under U.S. President Donald Trump, says %JPMorganChase (NYSE: $JPM ).

Venture capital funding for the crypto industry has been weak in recent years. However, this is now likely to change under President Trump, says JPMorgan analyst Nikolaos Panigirtzoglou in a new research report.

Previous enforcement actions by the U.S. Securities and Exchange Commission (SEC) and the climate of regulatory uncertainty under the previous administration of U.S. President Joe Biden kept venture capitalists largely out of the crypto sector in recent years.

While friendlier and more supportive policies under President Trump are sure to lead to increased venture capital funding, the amount of money is unlikely to match previous peaks seen in 2021 and early 2022, says JPMorgan Chase.

Panigirtzoglou notes that, despite a more favorable environment, crypto venture capital firms still face several challenges.

Traditional financial firms such as %Blackrock (NYSE: $BLK ) and Franklin Templeton are increasing their participation in the crypto market, and this leaves less market share for smaller venture capital firms, says the bank.

Also, early-stage crypto projects are avoiding large token sales to venture capitalists and are increasingly turning to community-driven platforms to raise money.

Elevated interest rates also present challenges for venture capital funding in general, says JPMorgan Chase.

Finally, Panigirtzoglou writes in the report that the growth of crypto exchange-traded funds (ETFs) is “inducing a trend towards passive investing,” which could divert capital away from venture capital firms.

Bitcoin is currently trading at $105,250 U.S. and is up more than 160% over the last 12 months.