In today’s edition, MLTech’s Leo Mindyuk offers a crypto outlook to 2025 and highlights key factors that could drive adoption of these assets.
Then, Miguel Kudry of L1 Advisors shares his thoughts on the topic on Ask and Expert.
–Sarah Morton
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2025 Outlook for Crypto Adoption: Building Bridges to the Mainstream
The crypto industry is entering 2025 with a renewed sense of purpose. Over the past year, the sector has witnessed key developments indicating the growing integration of cryptocurrencies into traditional finance (TradFi) and broader adoption of cryptoassets, especially bitcoin. However, the road ahead will test the resilience of this growing ecosystem. When assessing the outlook for 2025, several factors emerge as critical in shaping the adoption trajectory: regulatory clarity, institutional participation, and technological innovation.
1. Regulatory clarity: turning uncertainty into institutional guidelines
As I briefly mentioned in my CoinDesk podcast about the election night results and the price action around them, regulatory clarity is emerging as a critical factor for cryptocurrency adoption. The market has already started pricing with the expectation that the newly elected officials will bring the long-awaited structure to the digital asset ecosystem. We will see that some of those expectations will begin to be met this year. Key areas where we are likely to see more clarity include:
to) Definition and classification of digital assets: The United States is expected to refine the way digital assets are classified, whether as securities, commodities, or some combination. This clarity will directly impact the way tokens are issued, traded, regulated and taxed.
b) Stablecoins: These are likely to be a major focus for regulators due to their transformative real-world use cases and potential impact on financial stability.
do) Taxation of crypto transactions: Recent changes have already been made and we will likely see clearer tax reporting requirements for digital assets, various associated activities and various industry players.
Additional topics such as tokenization including real-world assets, custodial and non-custodial wallets, regulated trading venues, decentralized finance (DeFi), fight against money laundering (LMA) and know your customer (KYC) compliance and consumer protection will also be actively discussed and potentially acted upon.
2. Institutional participation: ETFs as a catalyst
In 2024, cryptocurrency ETFs experienced explosive growth, with billions in net inflows and notable launches. With new products, crypto ETFs now represent a rapidly expanding segment of the financial market, attracting significant investor interest and outperforming traditional funds. We will probably see a variety of adjacent products.
By 2025, growing inflows and high volumes of BTC and ETH ETFs will likely continue to validate cryptocurrencies as an asset class and streamline access for retail and institutional investors. This will pave the way for other single-asset ETFs, multi-asset ETFs, and several adjacent ETFs (e.g., leveraged, inverse, market timing, volatility). If regulatory clarity moves quickly enough, we may see the first crypto yield-generating ETFs in the US (e.g. staking). These products could generate additional investor interest in the asset class and increase capital inflows into active and passive investment products.
3. Technological innovation: the convergence of Blockchain and AI scalability
Technological advancements in 2025 will be driven by layer 2 blockchain scalability and AI integration. Rollups, zero-knowledge proofs, and interoperability will improve transaction efficiency and user experience for decentralized applications (dApps) and DeFi. At the same time, AI agents operating in decentralized networks will solve and optimize a variety of tasks and interact with users and each other. This synergy simplifies Web3 interactions and ensures secure and transparent execution of AI decisions on the blockchain. Together, these innovations will lower barriers to entry, attract developers and users, and accelerate widespread adoption, making 2025 a crucial year for the convergence of blockchain and AI.
Summary
The outlook for cryptocurrency adoption in 2025 is overwhelmingly positive, but it is not without challenges. Regulatory clarity, institutional participation and technological innovation will be the pillars of growth. The question is not whether cryptocurrencies will gain widespread acceptance, but how quickly and in what form. As we approach this next phase, those who adapt to the evolving landscape will lead the charge in shaping the future.
– Leo Mindyuk, CEO of ML Tech
ask an expert
Q. What were the most impactful developments in the cryptocurrency market over the past year and how have they shaped cryptocurrency adoption?
The most significant development in the cryptocurrency space last year was the political shift, when President-elect Donald Trump made cryptocurrencies a key part of his platform. Markets are just beginning to value the impact of the Executive and Legislative branches, along with financial regulators, who not only refrained from fighting the cryptocurrency industry but also encouraged cryptocurrency innovation within the United States. Beyond bitcoin adoption and the potential establishment of a national bitcoin strategic reserve, the broader implications for financial markets remain unclear for many market participants. Some of the world’s largest financial institutions that were previously on the sidelines are now actively developing their crypto strategy in response to the new pro-crypto administration.
Q. How is the evolving regulatory landscape likely to impact crypto markets and institutional participation in 2025?
The SEC’s regulation-by-enforcement approach has had a far-reaching impact on the crypto markets. A shift towards a neutral – or even positive – stance means that financial professionals and institutions will have to actively explore how to better serve their customers already engaged with cryptocurrencies, particularly given their decisive role in elections. Additionally, they will need to adapt their offerings to remain competitive in a world where financial markets and assets increasingly operate on cryptographic rails. Financial advisors, in particular, now have more opportunities to serve their clients by incorporating existing cryptocurrency allocations and cryptocurrency portfolios into comprehensive financial planning and strategy.
Q. Given the macroeconomic climate, how should financial professionals think about integrating cryptocurrencies into broader investment strategies in 2025?
The year 2025 will mark a fundamental shift for cryptocurrencies, moving from simply an asset class to becoming the infrastructure that underpins an increasing share of all asset classes. Put another way, with the adoption of crypto rails, financial professionals will be better equipped to respond to the macroeconomic climate, further accelerating the flywheel of asset tokenization, portfolio allocations, and broader adoption.
– Miguel Kudry, CEO, L1 Advisors
Keep reading
- JP Morgan’s E-Trade retail platform is considering adding cryptocurrency trading.
- The SEC’s lawsuit against Coinbase has been stopped and moves to the Second Circuit.
- Czech National Bank opens discussions on bitcoin as they consider reserve diversification options.
