Welcome back. 👋 Each week we cut through the noise and explain what’s driving crypto. This week is a special edition where we break down a16z’s annual “State of Crypto” report and give you the key takeaways. Plus they released their podcast that explains it all. We’ll be back to our regular weekly newsletter next week.

- Validator Digital

Before we get started on the year in review, a quick note on the markets. Momentum stayed positive across majors as spot ETF demand kept supporting prices, with Bitcoin products leading new inflows. Stablecoin supply remains near record highs, a sign that fresh liquidity is still entering the system. Traders are watching the upcoming Fed decision and macro headlines, but near term volatility has eased compared with mid October.

Every year, Andreessen Horowitz, known as a16z, one of Silicon Valley’s top venture firms, publishes its State of Crypto report. Think of it like a State of the Union address for blockchains, a clear read on where the industry stands and where it is going.

This year’s headline is simple: Crypto Went Mainstream.

Big banks are participating, Washington is warming, and the tech now runs at scale. If 2021 was the ‘hype cycle,’ 2025 is the ‘deployment cycle.’

We read the full report and pulled the key takeaways, plus the charts that tell the story.

This year, the biggest names in finance stepped in. Stablecoins made dollars fast and safe on public networks, giving Wall Street the confidence to offer crypto inside the accounts people already use. The result is crypto shifting from experiment to standard product across banks and fintechs.

Traditional financial giants like Citigroup, Fidelity, JPMorgan, Mastercard, Morgan Stanley, and Visa now offer or plan to offer crypto products directly to customers. Fintechs such as PayPal, Robinhood, and Stripe are building their own blockchains or using stablecoins to power everyday payments.

Institutional capital is coming through ETFs as well. Bitcoin and Ethereum ETFs now hold about $175 billion combined, up sharply from last year. The largest, BlackRock’s iShares Bitcoin Trust, became the fastest ETF in history to reach 10, 25, and 50 billion dollars in assets. Add in public companies that hold crypto on their balance sheets, and institutions now hold about 10 percent of all Bitcoin and Ethereum.

Why this matters
When the biggest banks and fintechs show up, distribution and trust follow. ETFs and retail platforms put crypto inside the accounts people already use, bringing new capital and smoother onramps. In short, Wall Street’s entry is turning crypto from a niche product into a standard option in mainstream finance.

This year, Crypto’s total market cap crossed $4 trillion. Bitcoin reached $126,000 per coin, and Ethereum and Solana recovered much of their post 2022 losses. More important than price is the usage story.

There are 40 to 70 million active onchain users, up about 10 million in a year, versus 716 million people who own crypto. The gap shows room to convert holders into users.

Why this matters
Price gains tell one story, but usage tells the real one. The next wave of growth comes from turning holders into participants. Millions already have wallets and basic familiarity. If they start using crypto to transact, invest, or save, adoption can compound quickly — especially as infrastructure improves and emerging markets catch up.

Stablecoins are now the fastest, cheapest way to send dollars, anywhere. Payments settle in under one second and usually cost less than a cent, making them faster than card networks and wire transfers.

More than 1 percent of all U.S. dollars now exist as tokenized cash, and stablecoin issuers together hold about 150 billion dollars in Treasuries. If stablecoins were a country, they would rank number 17 in the world in Treasury holdings, ahead of nations like Israel and Germany.

In the last year, Stablecoins processed 46 trillion dollars in transactions, or 9 trillion dollars after adjusting for non organic activity. That is more than five times PayPal and closing in on Visa and the ACH network.

Why this matters
Stablecoins are no longer a crypto side tool, they are becoming part of the global dollar system. When money moves instantly and almost for free, financial access expands and costs fall. Their growing Treasury holdings also mean real demand for U.S. debt, tying digital dollars directly into the global economy. In short, stablecoins are not just speeding up payments—they are reshaping how dollars move around the world.

Once Wall Street joined in, Washington’s tone changed fast. After years of uncertainty, lawmakers finally moved to give crypto clear rules instead of gray zones.

The GENIUS Act passed into law this year and set a federal framework for stablecoins and market structure. The CLARITY Act won approval in the House, which signals momentum but is not law yet. The White House issued Executive Order 14178, reversing earlier anti crypto directives and creating a cross agency effort to modernize digital asset policy.

The chart below shows how much policy activity accelerated this year. Agencies revised prosecution priorities, settled major cases, and launched new initiatives like Project Crypto and the President’s Working Group on Digital Asset Markets, signaling a coordinated shift toward clarity and innovation.

Why this matters
Clear rules lower risk and unlock new products. With a federal framework taking shape, more activity can stay in the United States, with better consumer protection and compliance. Policy clarity also speeds up hiring and investment, which means faster product cycles and real distribution.

Throughput and costs finally look like the real world. Across major chains, aggregate capacity is now about 3,400 transactions per second, more than one hundred times higher than five years ago. Fees on Ethereum L2s dropped from about 24 dollars in 2021 to less than a cent today, and settlement times are near instant in many cases.

Crypto’s backbone is no longer a patchwork. Bridges connect blockchains so users and assets move between networks, like an email going from Gmail to Outlook. In 2025 they carried tens of billions of dollars. The chart shows inflows and outflows by chain, with Ethereum, Arbitrum, and Hyperliquid leading as users chased faster speeds and lower fees. This interoperability makes crypto feel like one connected economy, not islands.

Why this matters
Faster and cheaper settlement makes onchain apps usable at scale. Bridges turn separate networks into one market, so liquidity and users can move to the best venue for price and speed. The result is lower costs, better experiences, and a platform that can support mainstream products.

2025 was (and continues to be) a big year for crypto. The market went mainstream. Stablecoins became the plumbing and moved dollars quickly and cheaply. Wall Street joined. Washington moved toward clarity. The networks got faster and more connected.

Crypto is never easy to predict, but several themes are attracting the most focus and investment today: new legislation, expanding stablecoin adoption, the convergence of crypto and AI, ongoing infrastructure upgrades, and more real world assets moving on chain.

The next year is already taking shape, and we look forward to sharing the State of Crypto 2026 with you.

Thanks for reading this Special Edition this week.

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See you next week,

Don’t speculate, validate.
- Validator Digital

Disclaimer: Individuals have unique circumstances, goals, and risk tolerances, so you should consult a certified investment professional and/or do your own diligence before making investment decisions. The author is not an investment advisor and may hold positions in the assets covered. Certified professionals can provide individualized investment advice tailored to your unique situation. This newsletter is for general educational purposes only, is not individualized, and as such should not be construed as investment advice.