Coinbase’s latest market outlook for 2025 identifies tokenization, the resurgence of DeFi, and a shift toward pro-crypto regulation in the US as key trends for the next year.
Coinbase expects 2025 to be a pivotal year for U.S. crypto law, after years of regulatory uncertainty. The exchange said these developments could redefine how crypto integrates with traditional financial and regulatory systems in the coming year.
Pro-crypto regulation
According to the exchange, a bipartisan pro-crypto majority in Congress signals a favorable shift, transforming regulatory frameworks from obstacles to catalysts for industry growth. Moreover, tHis advocacy for a strategic Bitcoin (BTC) reserve further reinforces the evolving attitude among lawmakers.
In August, Senator Cynthia Lummis proposed the ideafollowed by The Pennsylvania Recital of a Bitcoin Strategic Reserve Act, which could allow the state to devote up to 10% of its general resources to crypto.
While legal challenges remain, these initiatives indicate growing government interest in integrating Bitcoin into financial strategies.
Internationally, jurisdictions such as the EU, through the phased regulation of Markets in Crypto-Assets (MiCA), and financial centers such as the UAE, Hong Kong and Singapore are also building frameworks to foster innovation. This global momentum could further drive cryptocurrency adoption and innovation.
$30 trillion opportunity
The tokenization of real-world assets (RWA) gained significant momentum in 2024, with the market growing by more than 60% to reach $13.5 billion in December. Projections estimate that the industry could expand to a staggering level of between $2 trillion and $30 trillion in the next five years.
The report notes that traditional financial institutions are increasingly turning to tokenization, which uses blockchain technology to enable near-instant settlements and 24/7 trading. The scope of tokenization is expanding and includes government bonds, private credits, commodities, corporate bonds and even real estate.
Challenges such as the fragmentation of liquidity across multiple blockchains remain, but the report cites progress in these areas that tokenization could streamline investment processes and portfolio construction.
DeFi brings utility back
After a challenging cycle marked by unsustainable practices, decentralized finance is now moving to a more mature and transparent phase. Coinbase highlighted the growing synergy between off-chain and on-chain capital markets as a key driver of DeFi’s comeback.
The shift in the US regulatory environment could be a game-changer, enabling stablecoin governance frameworks and institutional access to DeFi. Decentralized exchanges now account for 14% of centralized trading volumes on exchanges, up from 8% at the start of 2023, reflecting increasing adoption.
Federal Reserve Governor Christopher Waller recommendation DeFi’s complementary role to centralized finance adds to the credibility of the sector’s potential.
Furthermore, innovations such as smart contracts and stablecoins are increasingly seen as tools to improve efficiency and reduce risk in traditional financial systems.
Stablecoins and ETFs
Stablecoins and crypto-based exchange-traded funds (ETFs) showed significant growth trajectories in 2024, and Coinbase sees them as key themes for 2025 as well.
Stablecoin’s market capitalization rose 48% to $193 billion, with forecasts suggesting the sector could reach $3 trillion by 2030.
Their role in facilitating faster, cheaper payments and addressing global financial needs positions them as a cornerstone of future adoption.
Meanwhile, spot Bitcoin and Ethereum (ETH) ETFs, launched in 2024, have attracted significant institutional interest. Their combined net inflows have reached nearly $40 billion in less than a year.
Innovations such as in-kind creations and redemptions for ETFs can improve efficiency and reduce costs, further strengthening their role in the crypto ecosystem.