With the development of the regulatory and technological environment, next year will be a crucial year for the cryptocurrency industry.

As the regulatory and technological environment evolves, broader adoption of cryptocurrencies will drive the industry closer to reaching its full potential, with significant changes expected in the crypto ecosystem. Breakthroughs and advancements in 2025 are likely to determine the long-term trajectory of the crypto industry for decades to come. Next year will be a key year.

Stablecoins are just getting started.

As of December 1, 2024, the market capitalization of stablecoins has increased by 48%, reaching a new historic high of $193 billion, and some analysts predict this number could grow to $3 trillion within the next five years. Year-to-date, the total trading volume of stablecoins has exceeded $27 trillion, about three times that of the same period in 2023. Stablecoins have validated their role in providing faster and cheaper payments globally for a wide range of users, from micro-enterprises to the world's largest companies. As the market capitalization and trading volume of stablecoins continue to soar, we are rapidly approaching a day when the primary and main use case of stablecoins will be global capital movement and commerce, rather than trading.

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As the cryptocurrency market continues to mature and expand, regulators are increasingly paying attention to and intervening in this emerging field. Hong Kong, one of Asia's financial centers, recently completed a legislative consultation on virtual asset over-the-counter (OTC) service providers. The completion of this legislative consultation marks an important step forward in Hong Kong's cryptocurrency regulation, and indicates that the OTC market may usher in a series of new regulations and requirements.

In the OTC market, stablecoins such as USDT play a vital role. They not only provide traders with a relatively stable value storage and exchange medium, but also play a key role in reducing transaction costs and promoting liquidity. Therefore, any legislative changes on the use of stablecoins may have a profound impact on the OTC market.

Coinbase is trying to obtain records of SEC Chairman Gary Gensler’s communications to support its fair notice defense. However, this attempt was rejected by Judge Katherine Polk Failla at a hearing on July 11. At the hearing, Judge Failla pointed out that Coinbase’s request was unreasonable because it included statements made by Gensler even before he became SEC Chairman in 2021.
Coinbase’s legal team argued that they needed Gensler’s comments quickly because there was no evidence that Gensler had not used a personal device or email account to discuss cryptocurrencies or communicate with market participants. This argument is intended to prove that the SEC may have taken a certain position on Coinbase that may have been influenced by Gensler’s personal opinions.

Understanding the complexities of cryptocurrencies is critical for policymakers to regulate effectively without stifling innovation.

The ongoing disconnect between policymakers and technology inevitably leads to proposed and approved regulations that ignore key parts of new technologies. Lawmakers and regulators in the United States face the challenge of developing regulatory policies in emerging technology areas such as blockchain and artificial intelligence. Policymakers such as Senator Cynthia Lummis have recognized the need for innovation in the financial sector and have proposed bills such as the Digital Asset Innovation Act to address related issues. However, the SEC's recent action against Ripple Labs highlights the current "regulation through enforcement" approach, which critics believe stifles innovation.