Key takeaways

• 2025 is anticipated to be a pivotal year for blockchain and crypto, marking significant industry shifts.
• Hundreds of millions are adopting blockchain technologies, highlighting a surge in user engagement.
• The US has reasserted itself as a leader in the crypto space due to favorable regulatory changes.
• Traditional finance is increasingly shifting towards blockchain and digital assets.
• By 2026, significant advancements in tokenization and market structure clarity are expected.
• The entry of traditional finance into blockchain presents both opportunities and challenges.
• The equity markets for crypto are experiencing a resurgence after a prolonged drought.
• The regulatory environment heavily influences infrastructure development in the crypto space.
• Digital wallets are expected to see massive growth, with billions of new wallets projected by 2026.
• Financial activity is converging on blockchains, driven by tokenization and stablecoins.
• The entire US financial system could transition to tokenization within a few years.
• The convergence of blockchain, AI, IoT, and decentralization is expected to drive major technological breakthroughs.

Guest intro

Matthew Le Merle is Managing Partner and CEO of Blockchain Coinvestors, a venture capital firm that has invested in over 40 pure-play blockchain venture capital funds and a combined portfolio of 1,500+ blockchain companies including 80+ unicorns. He previously managed Keiretsu, a prominent early-stage venture investor backing more than 300 companies annually. He is also Managing Partner of Fifth Era, which specializes in investment strategies focused on AI and blockchain.

The future of blockchain and crypto in 2025

• 2025 will be a breakout year for blockchain and crypto, marking a fundamental shift in the industry.

  — Matthew Le Merle

• Hundreds of millions are adopting blockchain technologies, indicating a significant adoption rate.

• Literally hundreds of millions are beginning to use these technologies

  — Matthew Le Merle

• The industry is at an inflection point, suggesting a critical moment in its evolution.

• We actually think matt that we’re at an inflection point.

  — Matthew Le Merle

• Infrastructure investments from 2018 to 2024 have made blockchain technology more accessible.

• There is so much infrastructure investment… now doing a lot of these things on blockchain rails is truly cheap or very simple.

  — Matthew Le Merle

• The regulatory landscape in the US is expected to continue evolving positively.

• The regulatory stance towards industry has just shifted in material ways.

  — Matthew Le Merle

• The US has regained its position as the center of the crypto blockchain universe.

• The US is clearly without a doubt the center of the crypto blockchain universe again.

  — Matthew Le Merle

The impact of regulatory changes on the crypto industry

• The US has regained its position as a leader in the crypto space due to recent regulatory changes.

• The US is clearly without a doubt the center of the crypto blockchain universe again.

  — Matthew Le Merle

• Increased regulatory clarity has accelerated the institutionalization of crypto.

• The institutionalization story here has really accelerated.

  — Matthew Le Merle

• The regulatory landscape for blockchain in the US is expected to continue evolving positively.

• The regulatory stance towards industry has just shifted in material ways.

  — Matthew Le Merle

• The regulatory environment heavily influences infrastructure development in the crypto space.

• Why would you build out any of this infrastructure if you effectively felt like crypto and digital assets were more or less illegal in the United States?

  — Matthew Le Merle

• The regulatory landscape for crypto is currently in a gray area, but stablecoins have a clear legal definition.

• We effectively operate in a gray area… the one exception to that is now stablecoins.

  — Matthew Le Merle

• The market structure bill is crucial for the future of the crypto industry.

• This bill is gonna outline who governs the spot market.

  — Matthew Le Merle

Traditional finance and its shift towards blockchain

• Traditional finance is undergoing a significant shift towards blockchain and digital assets.

• This is actually an enormous 180 degree shift that occurred this year for our industry.

  — Matthew Le Merle

• The entry of traditional players into the blockchain space is a double-edged sword.

• Large well funded incumbents coming into a space is always a double edged sword.

  — Matthew Le Merle

• Traditional finance will need to acquire capabilities rather than build them in-house.

• We’re hoping that 2026 is a year when traditional finance realizes it needs to buy capability.

  — Matthew Le Merle

• Traditional financial firms may face obsolescence if they do not adapt to changing market dynamics.

• Almost certainly they’re gonna be made obsolete.

  — Matthew Le Merle

• If traditional finance companies do not adapt by 2026, they risk becoming sellers rather than buyers.

• If you’re a traditional finance company if you don’t get going in 2026 I think you’re a seller not a buyer.

  — Matthew Le Merle

The rise of digital wallets and their future

• By 2026, we expect a significant increase in the number of digital wallets, with potentially 2 to 3 billion new wallets opened.

• We think that there’ll probably be two or 3,000,000,000 new digital wallets opened in the next three to five years.

  — Matthew Le Merle

• The steep increase in digital wallet openings is driven by the growing availability of diverse products and services.

• Those wallets now have more products and services to utilize.

  — Matthew Le Merle

• By 2026, digital wallets will evolve to offer a broad range of financial products, resembling platforms like Alipay or WePay.

• I think by the 2026 we’ll be looking a lot more like Alipay or WePay.

  — Matthew Le Merle

• The companies that will succeed in the digital wallet space will be those offering the easiest and most accessible product offerings at the lowest cost.

• Whoever has the easiest most accessible broadest product offering at the lowest possible cost is where the digital natives will go.

  — Matthew Le Merle

The convergence of financial activities on blockchains

• Financial activity is converging on blockchains, driven by tokenization and stablecoins.

• We’re in the midst of a sort of great convergence… the two use cases driving this are tokenization and stablecoins.

  — Matthew Le Merle

• Traditional fintech firms will increasingly integrate crypto products into their offerings.

• You may not even know that you’re using crypto products by using one of these firms.

  — Matthew Le Merle

• The abstraction of blockchain technology will allow users to engage with crypto without realizing it.

• You may be making a payment to a vendor with Visa and somewhere somehow there’s a blockchain transaction happening.

  — Matthew Le Merle

• The entire US financial system could shift to tokenization within a few years.

• The entire US financial system could shift to tokenization just within a few years.

  — Matthew Le Merle

The cyclical nature of capital markets and their impact

• The IPO window is cyclical and may close in 2026, impacting blockchain companies going public.

• The IPO window is a cyclical thing… it’s a fairly good probability that it will close down sometime in 2026.

  — Matthew Le Merle

• The capital markets may close down in 2026, impacting the availability of funding.

• There’s a substantial risk that the capital markets will close down sometime in 2026 because they always do.

  — Matthew Le Merle

• There is a risk that capital can suddenly become less interested in the crypto sector, leading to valuation declines.

• There is always a risk that that can reverse capital can suddenly get less interested in the sector and flow out.

  — Matthew Le Merle

• The scarcity of high-quality digital exchanges and blockchain custody companies will drive up their prices as demand increases.

• Everything’s an auction and scarce assets should start going for high prices.

  — Matthew Le Merle

The role of innovation and consumer demand in driving change

• The biggest breakthroughs in technology will come from the convergence of blockchain, AI, IoT, and decentralization.

• The biggest single breakthroughs that we’ll get back next year will be convergence place.

  — Matthew Le Merle

• Blockchain entrepreneurs are evolving into software engineers who integrate multiple advanced technologies.

• When we talk to blockchain entrepreneurs they’re no longer blockchain entrepreneurs they are software engineers.

  — Matthew Le Merle

• Governments do not drive innovation; rather, consumer demand for products and services is the primary catalyst for change.

• Governments don’t drive innovation and rules and regulations whilst valuable do not create in most cases powerful products and services.

  — Matthew Le Merle

• The demographic shift towards digital natives is significant and will influence the demand for innovative financial products.

• The genie’s out of the box now… the new voters all want this.

  — Matthew Le Merle

The importance of regulatory clarity for the crypto industry’s future

• The rulemaking from the SEC is likely to create a stable framework for the security token market.

• I’m actually pretty optimistic that that specific rulemaking would be really hard to roll back.

  — Matthew Le Merle

• Regulatory uncertainty is acceptable as the demand from users will prevent the industry from being shut down.

• I’m actually pretty comfortable right now living with regulatory uncertainty.

  — Matthew Le Merle

• The market structure bill is crucial for the future of the crypto industry.

• This bill is gonna outline who governs the spot market.

  — Matthew Le Merle

• The regulatory landscape heavily influences the infrastructure development in the crypto space.

• Why would you build out any of this infrastructure if you effectively felt like crypto and digital assets were more or less illegal?

  — Matthew Le Merle

The potential risks and opportunities for traditional financial firms

• Traditional financial firms may face obsolescence if they do not adapt to the changing market dynamics.

• Almost certainly they’re gonna be made obsolete.

  — Matthew Le Merle

• If traditional finance companies do not adapt by 2026, they risk becoming sellers rather than buyers.

• If you’re a traditional finance company if you don’t get going in 2026 I think you’re a seller not a buyer.

  — Matthew Le Merle

• Traditional finance will need to acquire capabilities rather than build them in-house.

• Traditional finance realizes it needs to buy capability because it can’t build everything in house that it needs.

  — Matthew Le Merle

• There is a significant amount of capital that needs to be deployed towards technology in the crypto industry.

• There’s an awful lot of capital that needs to be deployed towards technology.

  — Matthew Le Merle