Crypto's 2025 Wrap: Regulation and ETFs Advanced as Bitcoin's Year Ends With a Selloff

Source: CryptoNewsNet Original Title: Crypto’s 2025 Wrap: Regulation and ETFs Advanced as Bitcoin’s Year Ends With a Selloff Original Link: https://cryptonews.net/news/analytics/32206115/

Market Overview and Price Action

By the end of 2025, crypto had more institutional connections and control over it, although prices were taking a hit. In late December, Bitcoin fell below $88,000, pulling down most of the other major altcoins and reducing overall crypto market value by approximately $58 billion. Nevertheless, the largest news of the year was regulation, spot ETFs, and government interest in Bitcoin reserves.

In 2025, various governments took the step to establish crypto-fit within the current financial and legal frameworks. In the meantime, electronic markets made access to any part of the world with new spot exchange-traded funds based on key tokens. In addition to changes in policy, dealmaking also increased rapidly, with reports of record crypto transaction activity and an increased number of deals compared to 2024.

Australia’s Progressive Regulatory Stance

Australia had come up with two of the most-open policy stories of the year. In November, the Australian Treasury published a draft bill, according to which crypto exchanges would fall under the framework of the Australian Financial Services License. The proposal also considered some digital-asset platforms and tokenized custody services to be a financial service. Therefore, the regulations would require more crypto businesses to have an AFSL in case the regulations are implemented.

The draft was based on a wider digital-asset strategy announced in March. The purpose of such a strategy was to establish more specific regulations on digital assets and payment stablecoins. So far, the exchange in Australia was required to be registered with the AUSTRAC and comply with anti-money laundering and customer identification requirements.

In the past, one of the court cases in Australia raised controversy regarding the way Bitcoin should be treated by law. In May, Judge Michael O’Connell suggested that Bitcoin transactions need to be treated like cash, and not investment assets to use in capital gains. The case concerned claims that a former federal police officer had stolen 81.6 BTC in 2019. The ruling proposed a limited scope, which would cover Bitcoin and transactions that take place after 2019 should it not be overruled on appeal.

In Australia, crypto also continued to be of great concern among regular people. Research found that approximately 31% of Australians had invested or held crypto. It also indicated that the majority of crypto holders had Bitcoin, and many of the respondents considered Bitcoin as money or a store of value.

U.S. States Explore Bitcoin Reserves

In the United States, state politics of Bitcoin reserves became popular at the beginning of 2025. This is due to the momentum following Bitcoin reaching new all-time highs in 2024, which caught the attention of lawmakers to its hedge narrative. Measures were under consideration in Texas, Pennsylvania, Ohio, New Hampshire, and North Dakota by the end of 2024.

The interest of the state persisted until 2025. In December, Texas declared a crypto reserve and announced a purchase of 5 million Bitcoins. The officials termed the purchase as a temporary arrangement as the state tried to contract with a crypto bank. The relocation consumed half of a 10-million fund and made Texas the first state to invest in such a store.

ETF Expansion Beyond Bitcoin and Ethereum

Bitcoin and Ethereum were not the only spot ETFs to expand in 2025. Dogecoin and XRP were listed in the US in September in exchange-traded funds offered by certain providers. The tickers used were DOJE for the Dogecoin ETF and XRPR for the XRP ETF.

The listings were a significant move towards major altcoins in conventional market wrappers. Dogecoin was initially a parody token in 2013, but over time, it expanded to become a mainstream retail asset. XRP maintained a separate story with regard to international payment and settlement effectiveness. Also, such listings indicated ongoing demand for regulated access vehicles beyond the largest tokens.

Market Headwinds and Fund Flows

All headlines of 2025 were not upward. In November, crypto investment products registered a second consecutive week of $1.3 billion in weekly outflows. Cryptocurrency products saw approximately $932 million in outflows, and Ethereum products registered about $438 million in redemptions. Meanwhile, short Bitcoin products attracted the biggest inflows since May.

The pullback was associated with investor caution in the face of a prolonged government shutdown in the US and scarce economic statistics. Such a combination lowered the risk appetite and burdened positioning in crypto funds.

Another general market decline was experienced at the end of the year as outflows continued. Bitcoin dropped to less than $88,000 in December, and altcoins collapsed. Ether was around the 3,000 level following a 1.5% drop. NFTs were the worst-performing, with decreases of over 9% on the leading collections.

The total crypto market cap decreased to approximately $2.91 trillion following a decrease of $58 billion. Some lesser tokens reported sharp losses, such as Midnight (NIGHT), which dropped 28%. Large 2025 drawdowns in a number of major altcoins (Solana, Dogecoin, Cardano, Avalanche, and Shiba Inu) were also observed.

Institutional Involvement and Dealmaking

Institutional involvement however increased according to dealmaking data. A report indicated that there were $8.6 billion of crypto transactions by 2025. The number of deals was 267, which is an 18% rise over 2024. It further implied that conservative finance players were considering crypto to be lasting and investing in it with acquisitions.

Global Policy Developments

Late December brought several policy updates. Russia offered a framework, according to which retail and qualified investors could purchase digital assets based on specified rules. It also had an annual limit on purchases by retail investors and a testing requirement for both groups. Another point of the proposal would be to classify digital currencies and stablecoins as currency values, but prohibit the use for domestic payments.

Meanwhile, the US-based spot Bitcoin and Ethereum ETFs experienced net outflows before the holiday. The shift was connected to thin liquidity, rebalancing, and taking off profits as opposed to a significant conviction shift. A 25-basis-point increase in Bank of Japan rates was associated with the general risk-off environment. Additionally, a Japanese proposal of shifting the crypto tax to a flat 20% was cited.

Notable Market Movements

Lastly, the development featured the expansion of a stablecoin project. It claimed that the USD1 stablecoin grew its market value by approximately $150 million, to approximately $2.9 billion. It linked the jump with the USD1 Boost Program offered by a certain major exchange, which provided better yields on flexible earning products.