The cryptocurrency market experienced significant expansion in 2024, nearly doubling in size. Global revenue is projected to reach $56.7 billion, up from $30.3 billion in the previous year. The United States remains the leading market, expected to generate $9.8 billion in revenue. However, the industry faces potential headwinds in 2025, with forecasts predicting a 20% decline in revenue.
Additionally, rising identity fraud threats pose a significant challenge to crypto businesses.
This article highlights key identity verification (IDV) trends shaping the financial and technology sectors in the cryptocurrency space next year, drawing from Regula’s recent global study.
Trend #1: The Rise of Deepfakes in Identity Fraud
Deepfakes—AI-generated synthetic media replicating real people—have become a serious threat. Regula’s research reveals a sharp increase in deepfake usage for identity fraud: a 20% rise in video deepfakes and a 12% increase in audio deepfakes compared to 2022.
The crypto industry is particularly vulnerable. In 2024, 53% of companies reported encountering deepfake videos in their verification systems, an 18% increase from 2022. Since most crypto providers rely on fully digital ID verification, fraudsters exploit deepfakes to bypass security measures, enabling account takeovers and phishing scams.
One notable case involved Singapore’s Prime Minister, Lee Hsien Loong. A deepfake video based on a real interview with CGTN falsely showed him endorsing a crypto scheme, misleading investors. This incident highlights the broader risks deepfakes pose to both financial security and public perception of the crypto industry.
Takeaway: Crypto companies must enhance their detection systems and continuously update their fraud prevention strategies to stay ahead of deepfake threats.
Trend #2: Traditional IDV Threats Persist
Despite the growing focus on deepfakes, conventional identity fraud methods remain prevalent.
- 45% of crypto companies report encountering fraudulent or altered physical identity documents.
- Synthetic identity fraud—where real data is combined with AI-generated elements—affects 53% of businesses.
Since many crypto platforms still require government-issued IDs for Know Your Customer (KYC) compliance, fraudsters continue to exploit these systems. However, as self-sovereign identity (SSI) frameworks gain traction, digital IDs stored in secure wallets may eventually replace physical documents.
Takeaway: While AI-driven fraud techniques are evolving, crypto firms must also maintain strong defenses against traditional ID fraud.
Trend #3: Crypto Companies’ Stoic Approach to Fraud
Despite the increasing frequency of identity fraud, many crypto firms remain relatively unphased. Companies generally consider synthetic identity fraud (49%), video deepfakes (43%), and physical ID counterfeiting (53%) as moderate threats. Only 25% classify deepfakes as a critical concern.
In contrast, 42% of IT companies see video deepfakes as a major threat, recognizing the potential for large-scale damage.
Takeaway: A calm approach is valuable, but crypto companies must take proactive steps to strengthen their fraud prevention measures.
Trend #4: Regulatory Pressures and Penalties on the Rise
Crypto firms lost an estimated $440 million to deepfake attacks in 2024, trailing only financial services, law enforcement, and telecommunications in overall losses.
- 35% of crypto businesses cite legal expenses as a major concern.
- 33% worry about potential penalties.
New regulations, such as the EU’s Markets in Crypto-Assets Regulation (MiCA), are tightening compliance requirements. MiCA mandates transparent and authorized crypto transactions, requiring both sender and receiver identification. As regulations evolve, crypto companies must continually adjust their IDV procedures.
Interestingly, many industry players support stricter IDV regulations.
- 39% advocate for a dedicated regulatory body to monitor deepfakes.
- 31% support harsher penalties for creating and distributing fraudulent media.
Takeaway: With regulatory scrutiny intensifying, crypto firms should stay ahead by adopting higher security standards than current laws require.
Trend #5: Live Video Verification Becomes Standard
When it comes to IDV, most crypto companies prioritize multi-layered authentication methods.
- 90% rely on online document verification and live video interviews.
- 38% prefer live video interviews, while 34% favor document verification.
- 26% opt for biometric verification.
Common anti-fraud measures:
- Multi-factor authentication (MFA) with facial recognition (78%)
- Fingerprint and selfie verification (72%)
- MFA alone (58%)
As IDV becomes increasingly sophisticated, balancing security with user convenience remains a priority.
Takeaway: Crypto companies should enhance IDV by integrating multi-layered, liveness-based authentication. Tracking access devices, locations, and user behavior can help strengthen fraud detection.
The Future of IDV in Crypto
Emerging technologies such as portable digital IDs and zero-knowledge proofs could revolutionize IDV in crypto. However, adoption remains slow due to regulatory, technological, and user-experience challenges.
As the industry evolves, crypto firms may lead the way in implementing these advanced security measures.
Conclusion
Crypto companies must prepare for an increasingly complex fraud landscape. From deepfake threats to regulatory changes, proactive security measures will be essential to maintaining trust and compliance in 2025 and beyond.