In November, I sent a memo to EY’s blockchain leadership team, titled: "Every single private blockchain just died." Since the end of 2022, the crypto and blockchain sectors have been characterized by gradual recovery. The progress has been steady, yet slow, particularly throughout 2023.
By 2024, however, we began to witness a significant acceleration. The year kicked off with the launch of a Bitcoin ETF, and momentum continued with an Ethereum ETF and the EU's Markets in Crypto Assets (MiCA) legislation.
We have embarked on a journey towards global regulatory convergence, including establishing guidelines for all major crypto and digital assets. This has paved the way for public blockchains to thrive. Bitcoin is becoming synonymous with digital gold, while Ethereum serves as a foundational platform for digital assets and services.
Despite the consistent trajectory, the speed of change has been cautious. Many at significant financial institutions expressed their interest in transitioning to a public Ethereum setup but cited regulatory issues as a barrier. Following the U.S. election on November 5, however, the potential for substantial regulatory evolution became evident, signaling a shift toward rapid growth in public blockchain networks.
Predicting for 2025, I foresee a dramatic transformation in the U.S. regulatory landscape, likely influencing global trends, albeit at varying speeds. Given that the U.S. represents the world’s largest financial market, these changes carry considerable weight.
Bitcoin is already reaping the benefits, solidifying its status as the digital equivalent of gold. Throughout 2025, it could officially be recognized in this role as nations and governments begin to invest in strategic Bitcoin reserves. Historically, I’ve anticipated Bitcoin’s growth aligning with an eventual market capitalization comparable to gold's, which currently stands at approximately $14 trillion. Bitcoin’s appeal as a scarce asset is compelling, as price increases do not inflate its availability.
Ethereum’s future also looks promising. It has effectively transitioned to proof-of-stake, decreasing carbon emissions by more than 99% and massively enhancing scalability. The overall capacity of the Ethereum network has multiplied significantly since the last market surge, with consistent low transaction fees expected to persist for the foreseeable future.
Beyond cryptocurrencies, we anticipate a significant upswing in stablecoin transactions in 2025. The practical advantages and use cases surrounding stablecoins are burgeoning globally, particularly as users seek access to U.S. dollars for international transactions. Firms like Circle collaborate with Nubank in Brazil to enable direct access to USDC payments for all its clients. Meanwhile, Celo, an Ethereum-based network, has worked with Opera to embed stablecoin payments into its web browser, catering to low-cost smartphones predominant in emerging markets.
Stablecoin transactions have also penetrated the enterprise sector. Companies such as EY, PayPal, and Coinbase are working with SAP to facilitate fully automated payments through enterprise ERP systems, streamlining the integration of crypto-based transactions.
The year 2025 may also herald a breakthrough for decentralized finance (DeFi), which replicates vital financial services functions via software applications running on decentralized networks. Although DeFi saw minimal regulatory progress and was less attractive during periods of higher real-world interest rates in 2024, forthcoming favorable regulations could reignite interest in on-chain yield-seeking strategies.
Ultimately, the revolution will not stem from entirely new developments but from an accumulation of advancements across the blockchain ecosystem. As competition intensifies, entities previously hesitant to engage are poised to dive in. 2025 is predicted to be challenging yet promising for all blockchain stakeholders.
"Happy New Year and have a great 2025!"
