Global IDV Trends in Crypto for 2025: Key Insights and Challenges

The Crypto market nearly doubled in size in 2024, with global revenue projected to hit $56.7 billion, up from $30.3 billion last year. The United States remains the leader, generating the highest revenue globally, expected to reach $9.8 billion this year.

However, 2025 may bring challenges for Crypto companies, with a potential 20% revenue decline on the horizon. Rising identity threats are also set to add pressure, making effective identity verification (IDV) more critical than ever.

This blog outlines key crypto identity verification trends that could impact financial institutions and tech companies in Crypto. Insights are drawn from Regula’s latest study, which surveyed companies in the U.S. and worldwide.

Trend #1: Deepfakes Become a Growing Threat

Deepfakes—AI-generated media imitating real people—are now a mainstream identity fraud tool. Regula's study reports a 20% rise in video and 12% increase in audio deepfakes used for fraud compared to 2022. In Crypto, 53% of companies encountered video deepfakes in 2024, up from 45% in 2022.

Fraudsters use deepfakes to bypass IDV checks during onboarding or authentication, exploiting the fully digital verification processes of most Crypto providers. This trend poses significant risks, from presentation attacks and account takeovers to phishing schemes.

Example:

A deepfake video of Singapore’s Prime Minister, Lee Hsien Loong, promoted a fraudulent cryptocurrency scheme, falsely guaranteeing investment returns. Such cases highlight the potential for deepfakes to undermine trust in the Crypto industry.

Takeaway:

Crypto companies must proactively develop robust systems to detect and counter deepfakes, ensuring continuous improvements to address this rapidly evolving threat.

Trend #2: Traditional IDV Threats Persist

While deepfakes dominate the conversation, traditional identity fraud remains a significant challenge. In 2024, 45% of Crypto companies faced fake or altered physical identity documents. Synthetic identity fraud, combining real data with AI-generated elements, affected 53% of businesses.

Many Crypto companies still rely on government-issued IDs for account verification, making them vulnerable to these attacks. Although emerging concepts like self-sovereign identity (SSI) promise secure digital ID solutions, physical ID fraud remains a pressing issue for now.

Takeaway:

While addressing new threats like deepfakes, Crypto businesses must remain vigilant against traditional ID fraud methods, which are still growing.

Trend #3: Stoicism Amid Rising Identity Fraud

Despite the increasing prevalence of identity fraud, many Crypto companies view these threats with relative calm.

Regula’s study shows:

• 49% of companies see synthetic identity fraud as a moderate threat.

• 43% view video deepfakes similarly, with only 25% considering them a serious issue.

This stoicism contrasts with other industries, like IT, where 42% consider video deepfakes a significant concern.

Takeaway:

While staying composed is admirable, Crypto companies must take more significant action to protect their businesses and customers from identity fraud threats.

Trend #4: Regulatory Scrutiny and Penalties on the Rise

The Crypto industry lost an average of $440 million to deepfake attacks last year, with legal expenses and regulatory fines among the top concerns. For example, the EU’s Markets in Crypto-Assets Regulation (MiCA) introduces stricter rules on identifying transaction participants, prompting companies to refine their IDV processes.

Interestingly, 39% of Crypto businesses advocate for a regulatory body to monitor and combat deepfakes, while 31% support stricter IDV standards and penalties.

Takeaway:

Crypto companies must stay ahead of evolving regulations by adopting robust IDV systems that exceed current requirements, safeguarding against both financial losses and compliance risks.

Trend #5: Live Video Verification Gains Popularity

Live video interviews and online document verification are emerging as the most effective IDV methods in Crypto, with 90% of companies adopting them. Multi-factor authentication (MFA) using facial recognition, fingerprint scans, and selfies further enhances security.

Platforms like Bybit and OKX now require users to submit live selfies alongside photo IDs for verification. While these layered IDV processes strengthen security, maintaining a seamless user experience is crucial.

Takeaway:

A multi-layered, liveness-centric approach to IDV is becoming standard in the Crypto industry. By integrating additional checks like device and location verification, companies can enhance security while preserving user convenience.

The Future of IDV in Crypto

Innovative IDV concepts, such as portable digital IDs and zero-knowledge proofs, are on the horizon. These technologies promise greater privacy and control but require widespread adoption and standardization. While many users remain unfamiliar with digital IDs, the Crypto industry is likely to be an early adopter of these advancements.

By balancing innovation, compliance, and security, Crypto companies can build trust and resilience in a rapidly evolving landscape.