In today’s issue, MLTech’s Leo Mindyuk provides a crypto outlook for 2025 and highlights key factors that could drive adoption of these assets.
Next, Miguel Kudry of L1 Advisors shares his thoughts on the topic in Ask and Expert.
–Sarah Morton
You’re reading Crypto for Advisors, CoinDesk’s weekly newsletter that features digital assets for financial advisors. Subscribe here to receive it every Thursday.
2025 Outlook for Crypto Adoption: Building Bridges to the Mainstream
The crypto industry is approaching 2025 with a renewed sense of purpose. Over the past year, the sector has seen key developments that signal a growing integration of crypto into traditional finance (TradFi) and wider adoption of crypto assets, particularly bitcoin. However, the road ahead will test the resilience of this growing ecosystem. As we assess the outlook for 2025, several factors emerge as critical in shaping the adoption trajectory: regulatory clarity, institutional participation, and technological innovation.
1. Regulatory clarity: transforming uncertainty into institutional guidelines
As I briefly discussed on my CoinDesk podcast about the election night results and accompanying price action, regulatory clarity emerges as a critical factor for crypto adoption. The market has already begun to anticipate that the newly elected officials will bring long-awaited structure to the digital asset ecosystem. We’ll see some of those expectations start to come to fruition this year. Key areas where we are likely to see more clarity include:
A) Definition and classification of digital assets: The United States should refine how digital assets are classified, whether they are securities, commodities, or some combination. This clarity will directly impact how tokens are issued, traded, regulated and taxed.
b) Stable coins: These will likely be a major priority for regulators due to their transformative real-world use cases and potential impact on financial stability.
c) 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 platforms, decentralized finance (Challenge), fight against money laundering (LBC) and know your customer (KYC), compliance and consumer protection will also be actively discussed and potentially implemented.
2. Institutional participation: ETFs as a catalyst
In 2024, crypto ETFs have seen 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 likely see a variety of adjacent products.
Looking ahead to 2025, growing flows and high volumes of BTC and ETH ETFs will likely continue to validate crypto 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 various adjacent ETFs (e.g., leveraged, inverse, market timing, volatility). If regulatory clarity advances quickly enough, we could see the first yield-generating crypto ETFs in the United States (e.g. staking). These products could generate additional investor interest in this asset class and increase flows into passive and active investment products.
3. Technology 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. Simultaneously, AI agents operating on decentralized networks will solve and optimize various 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 pivotal year for the convergence of blockchain and AI.
Summary
The outlook for crypto adoption in 2025 is overwhelmingly positive, but not without challenges. Regulatory clarity, institutional participation and technological innovation will be the pillars of growth. The question is not whether crypto will be accepted by the general public, but how quickly and in what form. As we approach this next phase, those who adapt to the changing landscape will take the lead in shaping the future.
– Leo Mindyuk, CEO, ML Tech
Ask an expert
Q. What have been the most notable developments in the crypto market over the past year and how have they shaped crypto adoption?
The most significant development in crypto last year was political change, with President-elect Donald Trump making crypto a key part of his platform. Markets are just beginning to factor in the impact of executive and legislative branches, as well as financial regulators, who have not only refrained from cracking down on the crypto industry but also encouraged crypto innovation in states -United. Beyond Bitcoin adoption and the potential creation of a national strategic Bitcoin reserve, the broader implications for financial markets remain unclear to many market participants. Some of the world’s largest financial institutions, which were previously on the sidelines, are now actively developing their crypto strategy in response to the new pro-crypto administration.
Q. How will the changing regulatory landscape impact crypto markets and institutional participation in 2025?
The SEC’s regulatory-by-enforcement approach has had a significant impact on the crypto markets. The shift to a neutral – or even positive – stance means that financial professionals and institutions will need to actively explore ways to better serve their clients already engaged in crypto, especially given its decisive role in elections. Additionally, they will need to adapt their offerings to remain competitive in a world where financial markets and assets increasingly run on crypto rails. Financial advisors, in particular, now have more opportunities to serve their clients by integrating existing crypto allocations and crypto portfolios into overall financial planning and strategy.
Q. Given the macroeconomic climate, how should financial professionals consider integrating crypto into broader investment strategies in 2025?
The year 2025 will mark a crucial shift for crypto, moving from just being an asset class to the infrastructure that underpins a growing portion of all asset classes. In other words, 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 allocation, and broader adoption.
– Miguel Kudry, CEO, L1 Advisors
Continue reading
- JP Morgan’s retail platform E-Trade is considering adding cryptocurrency trading.
- The SEC’s lawsuit against Coinbase has been stayed and is moving to the Second Circuit.
- Czech National Bank opens discussions around Bitcoin as it considers reserve diversification options.
