State of the
Crypto Industry

Compliance is vital for crypto companies, but meeting standards alone won't ensure competitiveness. To excel, companies must enhance user experience to attract and retain users.

The crypto industry is undergoing rapid evolution, with pivotal events driving unprecedented growth and significant challenges. This includes the SEC's approval of Bitcoin ETFs, the anticipation of Bitcoin halving, and Trump’s re-election rally, which triggered substantial surges in platform activity. According to our internal data, these events have led to a 20% spike in client traffic.

Crypto's rapid growth hinges on more than just market trends—it depends on operational efficiency. Verification time has become a critical factor.

Let’s see how advancements in verification methods, particularly the adoption of document-free verification, are shaping the crypto landscape. Verification time is measured in seconds for this analysis.

Advancements in verification technologies in the crypto industry have significantly improved anti-fraud and AML efforts in 2024.

Sumsub’s Crypto Industry Research Survey 2024 shows a strong preference for automated third-party solutions and combined methods, as manual and in-house verification struggle to meet the crypto industry's fast-paced demands.

Sumsub’s Crypto Industry Research Survey 2024 shows that document-based ID verification and AML screening are the prevalent verification methods in the crypto industry.

Other practices like proof of address (PoA) and liveness checks are common, but new methods such as NFC-based verification remain less adopted.

The challenges of verification processes vary widely, with each region highlighting distinct priorities and obstacles. The following Sumsub’s Crypto Industry Research Survey 2024 data shows how issues like false positives in APAC and slow verification times in Africa underscore the broader challenges faced across the crypto industry, emphasizing the need for tailored solutions to enhance both efficiency and satisfaction globally.

Onboarding pass rates are a critical metric for evaluating both compliance effectiveness and user experience on a global scale. These rates offer valuable insights into how platforms navigate the delicate balance between stringent regulatory requirements and customer processes.

PoA verification is a critical compliance step for crypto businesses, ensuring users meet regulatory requirements.

Document-free verification has changed the landscape of identity checks by replacing physical documents with trusted digital databases. This ensures AML compliance while streamlining security and onboarding.

Millions of users onboard into the crypto space every month, but many face the frustration of repeated verifications. Time and time again, users must resubmit the same documents, even when interacting with businesses that work together, such as exchanges and onramps. This creates unnecessary friction and leads to higher drop-off rates, frustrating users and hurting businesses. Worse, repeated sharing of Personally Identifiable Information (PII) increases privacy risks, compounding the challenges of traditional KYC processes.

This problem is also relevant in the Web3 world, where KYC isn’t required today. Unhosted wallet users are still tasked with completing KYC when interacting with centralized businesses. For example, they need to pass KYC with each onramp separately while purchasing crypto.

Old-school KYC methods are increasingly falling behind the evolving demands of the global crypto ecosystem. Some companies are attempting to step in with on-chain technological solutions, like ZK Proofs or Soul-Bound Tokens, to address this issue, but these methods fail to meet traditional regulatory compliance requirements, which in turn leads to low adoption rates.

An alternative would be to allow users to share the underlying documents from prior KYC procedures, reducing friction while meeting the compliance requirements from both an AML and Data Privacy standpoint.

Document forgery remains the most prevalent fraud type, affecting 31% of respondents globally.

2024 saw key regulatory updates in crypto, onboarding, and monitoring, as jurisdictions balanced innovation and compliance to address emerging risks.

The Regulation (EU) 2023/1113, concerning information accompanying transfers of funds and certain crypto-assets (commonly referred to as the TFR), came into effect in June 2023, introducing harmonized Travel Rule requirements across the EU. However, its provisions became applicable on December 30, 2024. Additionally, the European Banking Authority (EBA) issued guidelines on the Travel Rule, which also started to apply since December 30, 2024, providing further clarifications on the regulation.

In tandem with to the EU's progress, 2024 also saw continued advancements in Travel Rule implementation across other jurisdictions.

We analyzed critical regulatory changes for crypto, including stablecoin regulations, tokenizing real-world assets, investor protection, licensing, and sustainability efforts. This overview shows how various jurisdictions shape the crypto industry's future through evolving priorities and innovative methods.

User onboarding in VASPs has been subject to regulation for quite some time. In most countries, these companies are classified as obliged entities for AML/CFT purposes. However, there is still room for improvement. In this section, we will review some of the updates introduced in 2024.

2024 marked significant advancements in global Travel Rule implementation, driven by the EU's December 30 deadline for mandatory adoption across all member states. However, Sumsub’s Crypto Industry Research Survey 2024 showed that only 29% of companies are fully compliant with the Travel Rule, highlighting the need for further alignment with international AML/CFT standards to enhance cross-border transparency.

It is also important to note that companies may comply with the Travel Rule not only due to legal obligations but also to adhere to global practices, such as those set by the FATF, even in the absence of regulations in their jurisdiction of incorporation. Additionally, mandatory adoption of the Travel Rule in major markets creates a de-facto need for compliance globally, as compliant VASPs in regulated jurisdictions may be unable to send crypto transfers to non-compliant counterparts. Therefore, the number of Travel Rule-compliant companies does not necessarily correlate directly with the number of jurisdictions where the Travel Rule has been implemented.

Companies continue to face significant obstacles in complying with the Travel Rule, as highlighted by Sumsub’s Crypto Industry Research Survey 2024. These challenges reflect the complexities of navigating a fragmented regulatory landscape.

Discover leading crypto-friendly hubs in 2024 with well-defined regulations, strong infrastructure, and innovation-driven environments driving crypto asset industry growth.

In an industry where change is the only constant, crypto companies may reflect on past decisions and acknowledge key areas they wish they had prioritized earlier. These regrets highlight missed opportunities to address persistent challenges and stay ahead in a rapidly evolving regulatory landscape.

The key insights below reflect the changes companies wish they had implemented earlier, emphasizing the importance of foresight in navigating this dynamic industry.

In 2024, governments have intensified efforts to regulate virtual assets, pushing for transparency and reducing financial crime risks. Looking ahead, based on the Sumsub’s Crypto Industry Research Survey 2024, 60% of crypto respondents predict stricter regulations in 2025, reflecting a global trend toward comprehensive frameworks and increased oversight.

Trusted by 1,000+ crypto leaders worldwide, Sumsub delivers everything you need to stay compliant, prevent fraud, and drive global growth—in one seamless solution.