2025 was supposed to be the year crypto figured it out. Looking back, it feels more like a year where everyone figured out what they didn't know. Stablecoins dominated the regulatory conversation, institutions tiptoed further in, and the U.S., under a Trump resurgence, attempted to set the global tone. But did any of it really stick? Let's dig into the numbers.
Stablecoins, predictably, grabbed the spotlight. TRM Labs reports that over 70% of jurisdictions progressed stablecoin regulation. The EU’s MiCA rollout, the U.S.’s GENIUS Act – everyone was scrambling to define what a stablecoin is, and more importantly, how to tax it. The promise? Stablecoins becoming true mediums of exchange. The reality? More like a heavily regulated on-ramp for institutional players. I still think the entire stablecoin narrative is built on a shaky foundation; stability in crypto seems like a paradox, but that’s just me. (And I've been wrong before. Remember Pets.com?).
Regulatory clarity supposedly fueled institutional adoption. Around 80% of jurisdictions saw financial institutions announce digital asset initiatives, according to TRM. But announcements aren't balance sheets. How many of these initiatives actually moved the needle? It’s hard to say. Anecdotally, I'm seeing more interest, but most traditional firms are still treating crypto like a weird science experiment funded by spare change. They're dipping a toe, not diving in.
The Basel Committee's proposed prudential rules for banks' crypto exposures were slated for implementation by January 1, 2026, but with major jurisdictions such as the US and UK declining to adopt the standards, the Committee agreed to fast-track a reassessment of the rules. A softening of regulatory attitudes? Maybe. Or maybe just a recognition that those rules were completely impractical, and would've strangled any institutional interest in the cradle.
One thing is clear: institutions crave compliance. They want a regulatory framework they can understand and defend to their shareholders. Crypto-native firms are wising up to this, realizing that strong regulatory standing is the key to partnerships. But this also creates a two-tiered system: the compliant, institutional-friendly crypto world, and the wild west of DeFi that regulators are still struggling to understand.
The FATF and FSB warned about the dangers of regulatory arbitrage, highlighting North Korea's $1.5 billion hack on Bybit as an example of how illicit actors exploit unregulated infrastructure. But can we ever truly achieve global consistency? I doubt it. Crypto is inherently borderless, and regulators are inherently territorial. Someone will always find a loophole, a jurisdiction with lax rules, or a technology that skirts the edges of the law.
The US, under Trump, aimed to lead the charge with crypto-friendly policies. President Trump issued an executive order on digital assets emphasizing innovation, rejecting a retail CBDC, and creating a President’s Working Group on Digital Asset Markets (PWG). The PWG released a 163-page report in July — the most detailed whole-of-government framework to date — mapping coordinated action on market structure, stablecoins, payments, AML/CFT safeguards, and banking integration. Crucially, it directed regulators to provide clarity even absent congressional action. But this is where I get skeptical. A detailed report is just that: a report. It's not law, it's not policy, and it's certainly not a guarantee of future action. Plus, a lot can change in a presidential term. What happens if the next administration swings the other way?
And this is the part of the report that I find genuinely puzzling. Every jurisdiction seems to be doing its own thing, at its own pace, with its own priorities. The EU is all about MiCA, South Africa is grappling with stablecoins, and El Salvador is… well, El Salvador is still El Salvador, experimenting with Bitcoin and signing regulatory cooperation pacts with Bolivia. How do you build a global financial system on such a fragmented foundation?
2025 wasn’t the year crypto got tamed; it was the year regulators realized how hard taming a hydra really is. Stablecoins are now more defined, institutions are poking around, and the U.S. is trying to flex its regulatory muscle. But underneath the surface, the fundamental challenges remain: global consistency is a fantasy, innovation will always outpace regulation, and the decentralized nature of crypto makes it inherently resistant to control. And that’s probably a good thing, even if it makes my job as an analyst a little more difficult.
Extreme Greed: The Market's Slipping Reality
2025-12-05
