As we approach 2025, Manchester Digital is excited to share Picturing 2025 - a series of essays from our members offering insights into the tech trends and challenges ahead. Below, Chainalysis discuss Emerging Threats and Strategic Responses.
The evolution of cryptocurrency continues to disrupt both legitimate and illicit worlds. While decentralisation and innovation drive adoption, the darker underbelly of crypto enabled crime evolves just as rapidly. Having spent over a decade at the forefront of cybercrime investigation and cryptocurrency analytics and enablement, I’ve seen firsthand how criminals adapt their tactics and leverage new technologies.
One standout moment from my policing career involved providing expert witness testimony in crown court on the cryptocurrency elements of an international fraud scheme that defrauded victims out of millions of pounds. As my colleague Phil Larratt aptly put it, “Paul provided witness testimony on the cryptocurrency elements of this case, waxing lyrical to the court about Satoshi and the history of Bitcoin!” Such moments underscore how far the field has come in converting blockchain intelligence into legal evidence before an unacquainted jury. However, as we gear up for 2025, the challenges facing the public, businesses, regulators, and law enforcement are as persistent as Manchester’s rain.
The Illicit Use of Crypto Landscape Today
The latest data from Chainalysis paints anuanced picture of the illicit use of crypto. While 2023 saw a welcome reduction in overall illicit transaction volumes, the resurgence of ransomware, which surpassed $1 billion in payments, paints a worrying trend. The recent rise of stablecoin utilisation in scams and sanctions related activity and the increasing use of advanced laundering techniques, such as cross-chain bridges, signal a shift in tactics that could define 2025’s threat landscape.
Ransomware attackers, for instance, have adapted to improvements in cybersecurity by targeting supply chains and exploiting zero-day vulnerabilities. This escalation suggests that as defences improve, so too do the tools of attackers—a game of cat and mouse with billions of pounds at stake.
It’s a world where even the simplest mistakes can cause significant damage to organisations that only reinforces the need for vigilance.
All is not lost though, in 2019 I published a review of cybersecurity applications for blockchain and concluded that
blockchain as a standalone technology brings with it an exorbitant array of possible solutions for finance, logistics, healthcare and cyber security and much of that holds true today. The opportunities afforded to many through the adoption of cryptocurrency are being challenged by criminal innovation but equally met by novel ways to tackle crime in the age of crypto.
Predictions for 2025
It is common when making predictions of the future to have a tendency to overestimate short term advancement while underestimating long term change. Our old ways of storing and transmitting value will persist for a long time and despite how disruptive crypto has been for the financial sector in recent years, our experience throughout 2025 will likely be a linear iteration of what has been built upon in the past few years. Throw a few technology surprises and unpredictable market activity into the mix and we will likely have an interesting year ahead in crypto.
By 2025, I anticipate the following key trends in illicit use of crypto:
AI-Powered Attacks; The proliferation of AI tooling will enable threat actors to automate phishing campaigns, generate highly realistic social engineering tactics, and even identify vulnerabilities faster than human analysts. Criminals will often target the weakest link in a chain of activity, the human, and AI presents opportunities to enhance and scale how they go about their business.
Privacy Coin Proliferation; As increasingly popular stablecoins face further scrutiny by regulators, privacy-focused cryptocurrencies like Monero may regain popularity among cybercriminals, complicating the ability of investigators to follow the flow of illicit funds.
Hybrid Threats; Expect a convergence of traditional cybercrime and crypto facilitated crime. Criminals will leverage decentralised finance (DeFi) platforms, smart contracts and the general naivety of post-bull run newcomers not just for laundering but for orchestrating scams that exploit ignorance and the lack of centralised control.
Combating the Threat
What can the industry do to stay ahead? Drawing on insights from my previous research and the Chainalysis 2024 Crypto Crime Report, here are three strategies to counteract illicit cryptocurrency use:
- 1. Invest in Blockchain Compliance and Investigation Solutions and Education: The work of companies like Chainalysis has shown that even the most sophisticated laundering techniques leave a trail. Expanding blockchain analytics capabilities and wider enablement will be critical to disrupt criminal operations.
- 2. Strengthen Public-Private Partnerships: Collaborative efforts, like those between law enforcement and crypto companies in the disruption and prevention of billions of pounds of fraud, demonstrate the power of combined resources. As my previous research on policing bitcoin highlights cross-border cooperation will be crucial in this fight if sufficiently complemented with education and awareness programmes.
- 3. Proactive Regulation: Governments must adopt adaptive regulatory frameworks that balance innovation with accountability. The successes and setbacks of the past, such as sanctions-related enforcement, can offer valuable lessons.
Recommendations for Businesses and Policymakers
Businesses and policymakers alike will need to adopt proactive approaches to mitigate risks:
Businesses; Invest in robust incident response plans and integrate blockchain analytics into fraud detection workflows. As discussed in my previously mentioned article, A Systematic Literature Review of Blockchain Cyber Security, early identification of illicit patterns can prevent small issues from becoming reputational crises.
Policymakers; Prioritise education on cryptocurrency for law enforcement agencies and incentivise global cooperation to combat cross-border threats. Efforts like those documented in the N8 Policing Bitcoin research demonstrate how informed policy can amplify enforcement impact.
Looking Ahead
Looking ahead to 2025, I can’t help but reflect on how far this field has come since I first started investigating crime furthered by the criminal abuse of cryptocurrencies. From testifying in court about crypto enabled fraud, investigating firearms dealing and drug supply to leading an international training and investigation team that advises law enforcement and public sector agencies, my journey has mirrored the evolution of this space.
While the challenges are undeniable, the opportunities are equally exciting. By staying one step ahead, we can ensure that cryptocurrency’s "Master of Puppets" won’t always be the criminals pulling the strings. With Manchester’s industrious spirit as a backdrop, rain, grey skies, and all, our ability to rise to these challenges is as strong as ever. The future of cryptocurrency is bright, but vigilance will remain non-negotiable. Happy New Year Everyone!
By Paul Taylor.