Key Takeaways:
The growing risks of full-scale conflict in Europe, the Middle East, and elsewhere could “translate to heightened scrutiny” of crypto this year.
Crypto firms must be prepared to defend their actions, relationships, and transactions, analysts say.
In addition, the potential release of multiple CBDCs means that the industry will likely “see a large variant of regulatory controls established in 2025.”
The threat of an all-out global war continues to cast a shadow on world economies going into 2025. The crypto industry, which celebrated Bitcoin’s $100,000 milestone in late 2024, will not be spared.
Besides, there are some interesting regulatory changes to watch in the new year, including the European Union’s (EU) Markets in Crypto-Assets (MiCA) regulation and Donald Trump in office.
Global conflicts have traditionally encouraged speculative investment. However, according to four experts who spoke to Cryptonews, they have also prompted economic sanctions and greater government control of the markets.
“Uncertainty can either encourage investment where opportunities are identified or trigger profiteering as the war machine slowly activates,” said Mark Taylor, head of financial crime at crypto exchange CEX.io.
“Alternatively, it can discourage involvement by exposing vulnerabilities and creating a need for stronger controls, both locally and internationally, through measures like sanctions,” he added.
Experts say that Bitcoin, as a proxy for the crypto industry, introduces a new dynamic to the complex. That’s because of Bitcoin’s fledgling reputation as a gold-like store of value, able to withstand war-related market stress.
According to Taylor, the growing risks for full-scale conflict in Europe, the Middle East, and elsewhere could “translate to heightened scrutiny” for cryptocurrency companies this year. He told Cryptonews:
“They [crypto firms] must be prepared to defend their actions, relationships, and transactions, sometimes long after they occur, as their activities may later be examined in the context of global geopolitical events. There is no doubt that such events influence markets and confidence.”
For context, geopolitical tensions to watch in 2025:
The return of assertive and territorial U.S. President Donald Trump to arguably the world’s most powerful office.
Russian President Vladimir Putin’s threats to cross “red lines,” such as internationally agreed safeguards against nuclear warfare, in response to NATO’s support for Ukraine’s war effort.
Ukraine’s counter-offensive efforts and Russia’s escalating aggression.
Growing tensions in the Middle East, with regional powers Israel and Iran exerting influence, while the U.S. and Russia remain involved in the background.
Regional struggles to fill the geopolitical vacuum left by the fall of Syrian strongman Bashar al-Assad.
Banking ‘Illegal Wars’
Growing conflict in the Middle East and the threat of world war will encourage more sanctioned regimes like Russia, Iran, and North Korea to use Bitcoin rather than fiat currency, says Slava Demchuk, the CEO of compliance and blockchain forensics firm AMLBot.
“Russian businesses are using crypto assets to make cross-border transfers, evade sanctions, and launder money,” Demchuk alleged.
“We could anticipate that the G7 and the Western world could come up with new measures focusing on crypto business to prevent loopholes allowing Russians to evade sanctions,” he said in an interview with Cryptonews.
The move to crypto evasion comes after Russian banks were sanctioned and removed from the U.S.-linked SWIFT international payment system.
Dacian Cimpean, digital marketing specialist at decentralized apps platform MultiversX, observed that instability drives actors towards safe-haven assets.
For example, he noted that oil prices surged above $100 per barrel at the start of the Russia-Ukraine conflict in 2022, contributing to inflationary pressures and monetary policy reviews worldwide.
“On one hand, digital assets like Bitcoin are sometimes viewed as alternatives to traditional safe havens, attracting investors during times of turmoil,” Cimpean told Cryptonews.
“This perception has been evident in countries facing economic instability, where citizens turn to cryptocurrencies to preserve wealth.”
He added:
“Conversely, heightened geopolitical risks can lead to increased regulatory scrutiny and potential restrictions on crypto transactions, as governments aim to prevent capital flight or sanction evasion. Such measures can dampen market sentiment and introduce volatility.”
Is Bitcoin Truly a Safe-Haven Asset?
BRICS+, primarily made up of Brazil, Russia, India, China, and South Africa, are toying with the idea of a collective central bank digital currency (CBDC) that will speed up their de-dollarization drive.
The plan to diminish dollar influence using crypto assets faces two major hurdles. One is the withdrawal of M-Bridge, the Dutch platform that the nations hoped to use for the project. The other is U.S. President-elect Trump’s threat to suffocate the project.
In 2020, Venezuela turned to a government-issued crypto token, Petrodollar, to manage the effects of U.S. sanctions on its troubled democracy.
Stunned by sanctions against its nuclear program, North Korea turned to hack crypto funds, to beef up its defense budget. The UN reports that the pariah state raised $2 billion through cybercrime between 2019 and 2020.
These recent episodes symbolize how cryptocurrency has been implicated in geopolitical wrangling.
But Bitcoin has not always passed the safe-haven test. For example, BTC plunged 16% as the stock market crash of Aug. 5, 2024, rippled through crypto markets. By comparison, gold showed more resistance, retreating just over 1%.
In April, Bitcoin’s market value fell 6% despite a surge in demand for safe-haven assets as the conflict in the Middle East escalated.
On the other hand, gold rose 8%, and the U.S. dollar also rallied. Similarly, in October 2023, Bitcoin was relatively unchanged after the Hamas attack on Israel.
Regulatory Outlook: ‘Less Onerous, Less Protection’
In the U.S., the Trump Trade is back in play, with Bitcoin shooting past the psychological $100,000 mark following Trump’s election win.
According to analysts, here are some of the regulatory events to watch in 2025:
Europe — The MiCA regulation, which came into effect on Dec. 30, 2024.
U.S. — Donald Trump’s election as President and nominating crypto-friendly lawyer Paul Atkins to lead the SEC.
The potential passage of the Clarity for Payment Stablecoins Act to guide stablecoin issuers in the United States.
Measures to simplify tax reporting, reduce evasion, and ensure the crypto market contributes to tax revenues
Quick passage of clear legislation from a crypto-friendly Parliament of U.K. — FCA’s newly released roadmap for crypto regulation
Australia — Ongoing government assessment of crypto-related markets and ASIC’s regulation through enforcement stance.
Asia — DABA in South Korea, and continuing development in regulation in Japan, Hong Kong, China, and Singapore.
Latin America — emerging crypto rules.
“All of this, in combination with the potential release of multiple CBDCs, means we will most likely see a large variant of controls established around the globe in 2025,” said Taylor, the CEX.io financial crime head.
Taylor told Cryptonews that the inconsistency will depend on whether governments view crypto in a positive or negative light, adding:
“For the U.S., the future looks like there will be less onerous regulation, but therefore possibly less protection. In Europe, we can expect a comprehensive regulatory structure that will help develop markets and strengthen the approach of crypto companies.”
However, the EU will also “introduce complex requirements, including areas like market abuse and trade surveillance, which will be expensive and challenging to implement in crypto markets,” he said.
These types of matters will have knock-on effects that may well drive regulatory expectations and compliance for the next five years or so, Taylor says, adding:
“Crypto firms will need adaptability, expertise, and resilience to ride the uncertainty and keep regulators happy.”
Luc Froehlich, chief commercial officer at crypto firms’ free zone RAK Digital Assets Oasis, is, for the most part, optimistic about the European Union’s new regulations.
“The EU’s MiCA framework is particularly promising, especially given the size of the market it will open,” Froehlich told Cryptonews.
On the flip side, the nature of Europe as a bloc introduces challenges as there might be friction on a national level, resulting in the need for more regulation.
“With hubs like Singapore and Hong Kong, Asia has managed to stay nimbler and get ahead of the race to attract companies with increasingly crypto-accommodative regulations, although with the occasional speed bump,” Froehlich noted.
“This complex leaves the Middle East, particularly the UAE, in a sweet spot, straddling the East and West, offering a launchpad for global companies and demonstrating a clear appetite for blockchain-based solutions,” he opined.
How US Crypto ETFs Could Shape Regulations
When asked about how the U.S. Securities and Exchange Commission’s (SEC) approval of spot Bitcoin and Ethereum exchange-traded funds (ETFs) could shape regulatory frameworks for crypto assets in 2025, AMLBot’s Demchuk said:
“Institutional ETF flows have historically changed market dynamics. Similar approvals will not only bolster adoption but also encourage regulatory bodies to create clearer, more consistent guidelines that accommodate both traditional finance (TradFi) players and the broader crypto ecosystem.”
Froehlich disagrees that the SEC’s approval of crypto ETFs is a “watershed moment” for the industry.
He questions the mere idea of centralizing ownership of Bitcoin, which many people in the crypto industry consider the “most decentralized asset.”
“Bitcoin should be considered for its own merits and not necessarily held as representative of the overall ‘asset class’ or other cryptocurrencies,” he said.
Cimpean, the MultiversX digital marketing specialist, expects the Trump administration to come up with “swift legislative action, including the likely passage of the Clarity for Payment Stablecoins Act.”
“This legislation could provide regulatory clarity and encourage broader adoption of stablecoins in the financial system,” he said.
But he also warned that “Stricter oversight could limit stablecoin growth in emerging markets and impose additional burdens on investors and exchanges.”
The post Global Conflict and Tighter Laws Could Derail Crypto in 2025: Experts appeared first on Cryptonews.
