Coinbase's latest market outlook for 2025 identifies tokenization, the resurgence of DeFi, and the shift towards crypto regulation in the US as key trends for the coming year.
Coinbase expects 2025 to be a pivotal year for U.S. cryptocurrency legislation after years of regulatory ambiguity. The exchange said these developments have the potential to redefine how cryptocurrencies are integrated with traditional financial and regulatory systems in the year ahead.
Cryptocurrency protection regulations
The exchange said the bipartisan pro-crypto majority in Congress signals positive changes that will transform the regulatory framework from an impediment to a catalyst for industry growth. Furthermore, tHis push to create a strategic Bitcoin (BTC) reserve further solidifies the evolving stance among lawmakers.
August, Senator Cynthia Lummis proposed an ideafollowed by Pennsylvania considerations This could allow states to allocate up to 10% of their general funds to cryptocurrencies.
Although legal challenges remain, these efforts demonstrate growing government interest in incorporating Bitcoin into financial strategies.
Internationally, jurisdictions such as the EU and financial hubs such as the UAE, Hong Kong and Singapore are also creating frameworks to foster innovation through the Tiered Market for Crypto Assets (MiCA) regulation. This global momentum is likely to further spur cryptocurrency adoption and innovation.
$30 trillion opportunity
Real-world asset tokenization (RWA) gained significant momentum in 2024, with the market growing by over 60% to reach $13.5 billion by December. According to predictions, this sector could grow to a staggering $2 trillion to $30 trillion over the next five years.
The report noted that traditional financial institutions are adopting tokenization, which uses blockchain technology to enable near-instantaneous payments and 24/7 transactions. The scope of tokenization is expanding to include government securities, private credit, commodities, corporate bonds, and even real estate.
Although challenges still exist, such as liquidity fragmentation across multiple blockchains, the report notes progress in these areas and suggests that tokenization has the potential to streamline investment processes and portfolio construction. I'm doing it.
DeFi regains utility
After a difficult cycle marked by unsustainable practices, decentralized finance is now moving into a more mature and transparent stage. Coinbase emphasized that the increasing synergy between off-chain and on-chain capital markets is the main driving force behind DeFi's resurgence.
Changes in the U.S. regulatory environment could be a game-changer, enabling stablecoin governance frameworks and institutional access to DeFi. Decentralized exchanges now account for 14% of the trading volume of centralized exchanges, up from 8% at the beginning of 2023, reflecting increased adoption.
Christopher Waller Federal Reserve Board approval DeFi’s role as a complement to centralized finance increases confidence in the sector’s potential.
Additionally, innovations such as smart contracts and stablecoins are increasingly seen as tools to increase efficiency and reduce risk in traditional financial systems.
Stablecoins and ETFs
Stablecoins and crypto-based exchange-traded funds (ETFs) will see strong growth trajectories in 2024, and Coinbase sees them as key themes in 2025.
Stablecoin market capitalization rose 48% to $193 billion, with some predictions that the sector could reach $3 trillion by 2030.
Its role in facilitating faster, cheaper payments and addressing global financial needs is fundamental to future implementation.
Meanwhile, the Bitcoin and Ethereum (ETH) spot ETF launched in 2024 has attracted significant interest from institutional investors. Their combined net inflows are approaching $40 billion in less than a year.
Innovations such as in-kind creation and redemption of ETFs have the potential to improve efficiency, reduce costs, and further strengthen the role of ETFs in the cryptocurrency ecosystem.
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