In 2024, crypto came roaring back. Bitcoin reached a new high, surging above $100,000, as the cryptocurrency was packaged for the first time into exchange-traded funds offered by major investment companies. The crypto industry has proven that it has matured, characterized by innovations that have made its technologies useful to many more people, not just crypto enthusiasts.
This year should continue that trend as traditional finance applies blockchain — the distributed ledger technology that underpins cryptocurrencies such as Bitcoin — to some of the economy’s trickiest and most long-standing problems, and the U.S. embraces a far more ambitious agenda to mainstream some — but not all — digital assets.
At Mastercard, we have long argued that if blockchain technology is to fully realize its potential, security, trust and ease of use must be at the center. With these in place, fintechs and financial institutions would increase their adoption of blockchain technologies and create scalable use cases that could impact millions of people. In fact, many are moving forward with tokenized versions of both money and assets on blockchain networks. Behind this trend is a desire to improve efficiency and lower the costs of the everyday transactions that power the world economy.
As we look ahead to the rest of 2025, I see many changes coming to this sector, some due to a shift in the regulatory environment but most driven by the needs of consumers, businesses, banks and the economy.
Here are four areas to watch in the year ahead:
1.) Stablecoins or tokenized deposits? Both should find their place.
According to a 2023 report from the Federal Reserve, American banks have nearly $18 trillion in commercial bank deposits from businesses and individuals, including checking, savings and time deposits. These deposits fuel large parts of the world economy — funding bank loans and other financial services, powering consumer spend and driving trade and commerce. Still, innovations are needed to provide this form of money with the latest fintech advances.
To make that happen, banks are experimenting with what are known as tokenized deposits, which require issuing a token on a blockchain that represents a deposit on a bank’s own ledger. By doing so, banks hope to speed up the settlement of transactions and enable programmable payments, in which money can be distributed only after certain criteria are met. Stablecoins, which are backed by fiat currency at a 1-to-1 ratio, have been gaining traction, driven not only by trading activity but also by growing use cases such as remittance and business-to-business payments. As of this writing, there are about $200 billion worth of U.S. dollar-based stablecoins in circulation. Stablecoins, while requiring a lockup of capital, move in real time and enable programmable payments. Clearer regulatory framework will make stablecoins safer and attract additional participants and issuers.
I believe we will move to a world where both tokenized commercial bank deposits and stablecoins coexist, where transactions such as tokenized asset purchases start with tokenized money in bank accounts and settled through stablecoins.
2.) Clearer rules give banks and other institutions a green light to adopt digital assets.
The U.S.’s more crypto-critical stance got turned on its head with the inauguration of President Trump, who has vowed to be the first “crypto president.” Notably, on Trump’s second full day, the Securities and Exchange Commission launched a crypto task force to develop its own regulatory framework, led by SEC Commissioner Hester Peirce, and two days later the president issued an executive order on digital assets that set up a working group of key regulatory agencies to recommend clearer policies, where new laws are needed. Meanwhile, the European Union’s Markets in Crypto-Assets regulation went into full effect on December 30, making the EU the first major jurisdiction to establish a comprehensive regulatory framework for crypto. It offers financial institutions much more clarity on how regulators view digital assets and currencies and what a firm needs to do, for example, to issue a stablecoin. It has already emboldened more traditional players to act. It’s safe to say there will be more — if not crystal — clarity from lawmakers and regulators in 2025. Perhaps more of a plea than a prediction: More clarity on both crypto rules and how banks can participate in the public blockchain system will encourage more experimentation with the blockchain, allowing innovation to flourish while keeping bad actors at bay.
3.) Central banks will likely lean away from issuing digital currencies and into products for institutions.
Just a few years ago, many of the world’s central banks were looking at the feasibility of issuing their own currencies in digital form. Today, more and more central banks have concluded that the private sector is innovating well on its own and that central bank digital currencies aimed at the general public needn’t be a high priority. In fact, another element of Trump’s executive order on digital assets bans the development and issuance of CBDCs, calling them a threat to the stability of the financial system.
In 2025, I expect that more central banks will follow this trend, moving away from consumer-focused CBDCs, known as “retail” CBDCs. But they will continue to pursue digital assets aimed at the banking sector and other financial institutions, also known as “wholesale” CBDCs. These CBDCs could fundamentally increase institutional settlement capabilities and enable the faster movement of capital across jurisdictions.
4.) Interoperability, standards and trust will take on even more importance.
The crypto industry is now on a stronger foundation. The bad players have been pushed out of the space (or crashed spectacularly). Easier access to digital assets has attracted more everyday investors, and that, in turn, has caught the attention of traditionally risk-averse financial players like mutual fund companies. These changes have also reinforced how much trust, standards and seamless connections still matter to the larger financial system, where the lion’s share of monetary value still resides.
That’s why we’ve seen so much momentum behind Mastercard’s Multi-Token Network, which makes transactions using digital assets more secure, scalable and interoperable. For example, the MTN project last year completed its first live test, in partnership with Standard Chartered Bank, and partnered with Kinexys by J.P. Morgan. Blockchain technology that is safe and trusted can unleash innovation for both the crypto and traditional finance industries. In 2025, look for blockchain technology to embed even more deeply into banking and financial services, enabling faster transactions, more transparency, new capabilities and more innovation.
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