The cryptocurrency industry, valued at $3.6 trillion, is preparing for its first major M&A phase as the value of global deals will rise to more than $4 trillion in 2025.
Change is coming
The global economy is gearing up for a year of intense deals, with mergers and acquisitions (M&A) expected To exceed $4 trillion in 2025 – the highest level in four years.
This forecast comes against a backdrop of economic stability and expected regulatory shifts, driven by President-elect Donald Trump's promises of a pro-business agenda, promising deregulation, lower corporate taxes, and relaxed antitrust enforcement.
Antitrust enforcement, in particular, is expected to benefit sectors such as technology, finance, and retail, which have historically driven merger and acquisition volumes. However, the often overlooked cryptocurrency industry could also find itself at the center of this activity.
The cryptocurrency sector, worth more than $3.6 trillion as of January 17, has historically seen minimal consolidation compared to traditional industries, largely due to regulatory uncertainty. Therefore, it is uniquely positioned to benefit from these broader economic tailwinds. Let's understand how.
Regulatory shifts – a catalyst for cryptocurrency mergers and acquisitions
In mergers and acquisitions, regulation is often the deciding factor between stagnation and growth. Under the Biden administration, cryptocurrency companies have faced a challenging environment marked by intense scrutiny and restrictive policies.
The Securities and Exchange Commission, led by Gary Gensler, has followed strict enforcement procedures, which has made many companies wary about expansion or acquisitions.
But with President-elect Trump He promises Of editing and leadership repair At the Securities and Exchange Commission, the cryptocurrency sector may see its first major wave of deal making.
The potential impact of regulatory changes can be understood by examining recent trends in traditional markets. In 2024, leveraged buyouts rose 35%, to $600.8 billion, with private equity firms benefiting from improved financing conditions and reduced oversight.
These deals often target undervalued companies, providing a framework for how similar activity could look in the cryptocurrency space. For example, smaller cryptocurrency exchanges or blockchain infrastructure companies struggling under regulatory pressures could become attractive takeover targets.
Furthermore, the global rise in M&A volumes increased by 15% year-on-year to $3.45 trillion in 2024. The United States, which accounted for $1.55 trillion of this activity, saw a notable increase in deal volumes, with 37 deals exceeding 10 billion dollars.
In the context of cryptocurrencies, this can translate into major crypto players pursuing acquisitions to consolidate market share, diversify offerings, or enter new territories. The implications extend beyond acquisitions.
Regulatory clarity also paves the way for long-awaited cryptocurrency IPOs. The IPO market underperformed in 2024, with $110.6 billion raised globally, but a shift in SEC policies could reverse that trend.
Companies like Ripple (XRP), Kraken, and Circle, the company behind USDC (US dollars), which has long sought public listing, may finally find a way forward.
Consolidation – the development of cryptocurrencies under new conditions
Consolidation represents a major shift for industries moving from fragmented competition to structured maturity. In 2025, the cryptocurrency industry could enter this stage.
“The big ones may get bigger, the middle may shrink,” Hunter Horsley, CEO of Bitwise Asset Management, noted in a recent tweet, referring to the ability of dominant players to leverage their market power in an unregulated environment.
If companies like Amazon or Google can easily follow up on acquisitions like Instacart or Uber, it will set off a broader trend in which the largest players consolidate resources while mid-sized companies struggle to keep up the pace. For cryptocurrencies, the implications are twofold.
On the one hand, the conceptual appeal of decentralization - the foundation of cryptocurrencies - could gain greater importance. As large companies grow more centralized, consumers may gravitate toward decentralized finance platforms as an alternative to systems they view as being overly controlled.
On the other hand, the sector may face a wave of consolidation of its own. Cryptocurrency giants may target smaller, region-focused competitors to increase their global presence, boost liquidity, or acquire the latest technology.
To understand this, we can look at patterns in traditional markets. In the early 2000s, search engines, which were once numerous, joined forces as Google emerged as the dominant player, acquiring smaller competitors to improve its offerings and boost its market share.
Likewise, in the cryptocurrency space, bigger players like it Binance or Coinbase It may benefit from acquisitions to enhance its dominance, streamline services, and expand into underserved areas.
Much like the broader fintech trend, companies like Stripe acquired Small businesses like Bridge for $1.1 billion to bolster their infrastructure. Large stablecoin issuers may follow similar steps to secure better scaling and compliance solutions.
Stablecoins have become a major component of the cryptocurrency economy, with lifetime transactions exceeds $233 trillion as of January 17. However, when excluding “inorganic” activities, such as transactions conducted by bots and automated systems, the total volume exceeds $17 trillion.
As a result, major issuers of stablecoins such as TetherUSDT) Or Circle may seek to acquire smaller providers to enhance its dominance in cross-border payments or tap into specific geographic markets where adoption is increasing.
The potential for consolidation in cryptocurrencies is huge, but its implications go beyond market efficiency or competitive advantage – as the industry begins to align with broader economic trends while retaining its unique focus on decentralization.
What do the experts think?
To understand the potential impact of M&A activity on the cryptocurrency industry under the Trump administration, crypto.news spoke with Lucas Zhang, private equity investor and CEO of EPAL.
Easing regulatory restrictions
Chang began by talking about how the Federal Trade Commission and the Department of Justice are adapting their approach to reviewing cryptocurrency mergers.
“With a pro-business administration, we are likely to see a more lenient stance on mergers, especially in innovative industries like cryptocurrencies.”
He noted that such leniency would likely depend on how deals contribute to broader goals such as job creation, global competitiveness, and blockchain's role in securing financial systems.
Zhang also spoke about cross-border payments as a key area that may impact how regulators evaluate the strategic value of cryptocurrency-related mergers.
“The decentralized nature of blockchain reduces fraud and simplifies international transactions – attributes that align with modern economic priorities.”
Monopoly risk
The more relaxed regulatory environment also raises concerns about monopolistic behavior in the cryptocurrency space, particularly in concentrated sectors such as exchanges, stablecoins, and custodial services. Zhang pointed to the giants' dominance in key areas as a cautionary example.
“In the Asia-Pacific region, Binance has faced scrutiny over its dominance of the exchange market, raising concerns about its control of global liquidity and its ability to strangle smaller rivals. In the European Union, the growth of stablecoins such as Tether has raised questions about the systemic risks they could pose.” , especially since their market dominance can reduce diversity in the financial ecosystem.
To address this problem, Chang proposed a balanced approach, inspired by Japan's regulatory framework, as a model for U.S. regulators to emulate. Zhang noted.
“A country like Japan provides a good example of how regulators can achieve this balance. Japan has developed a relatively balanced regulatory framework for cryptocurrencies, promoting innovation through clear and supportive laws while ensuring that platforms adhere to strict anti-money laundering (AML) standards and consumer protection.”
Startups: Hope or Hostage?
For startups, Zhang emphasized that M&A activity is a double-edged sword. He said:
“On the positive side, acquisitions can provide startups with capital, resources and access to larger markets, allowing them to scale more effectively. However, there is also a significant risk that consolidation will stifle innovation.
But he also warned of the risks.
“On the other hand, dominant players may acquire smaller companies simply to neutralize competition and limit diversity in the ecosystem.”
Some platforms, especially those focused on AI and decentralized infrastructure, show how small businesses can still innovate and grow in a more consolidated industry. However, regulators need to ensure that these startups have the space to continue innovating and expanding, even as larger players gain more power in the market.
Strategic objectives
Zhang identified providers of blockchain infrastructure, web3 platforms and compliance solutions as the most likely acquisition targets for traditional financial institutions.
“These companies are prime targets because they provide the technology and frameworks needed to bridge the gap between traditional finance and the emerging blockchain ecosystem. By acquiring such companies, organizations can accelerate their digital transformation, access cutting-edge decentralized technologies, and ensure they meet increasing regulatory requirements in Cryptocurrency field.
For example, compliance technologies that simplify the onboarding process and improve transaction monitoring are especially valuable as organizations seek to integrate blockchain solutions.
Zhang also pointed to the growing appeal of AI-powered platforms in the cryptocurrency space.
“Innovations that enhance operational efficiency and expand service offerings will naturally attract interest, especially as organizations look to modernize their operations.”
The road ahead
Regulatory clarity under the Trump administration is expected to unlock new confidence among investors, especially in high-growth cryptocurrency sectors such as decentralized finance and blockchain infrastructure.
With clearer rules, venture capital and private equity firms can act decisively, directing resources to technologies that bridge traditional finance and decentralized systems. This influx of capital can stimulate innovation, scalability and broader adoption.
However, the risks of unchecked consolidation loom large. When dominant players absorb smaller competitors, market diversity decreases, making innovation vulnerable to stagnation. Over-centralization can also amplify volatility as the industry becomes dependent on a few key entities for liquidity and infrastructure.
The challenge is to maintain balance. Effective oversight should encourage investment and cooperation without undermining the spirit of decentralization that makes cryptocurrencies unique.
Source link