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From Fringe to Financial Infrastructure: How Blockchain Became Bankable

DATE POSTED:April 7, 2025

File this under things you couldn’t say two years ago: Blockchain technology is maturing, and its potential for compliant, mainstream use is growing.

“Banks are in the state where they are thinking about blockchains as public infrastructure that they need to rely on,” Chainalysis co-founder and CEO Jonathan Levin told Karen Webster.

In particular, Levin said the adoption of stablecoins is one of the most significant shifts in blockchain usage, at least since Chainalysis began in 2014. The shift has been monumental. Now, hundreds of billions of dollars move across blockchains while being stored in traditional financial institutions like banks or United States treasuries.

“When we started the business in 2014, that wasn’t yet a concept,” he said. “Cryptocurrency only meant blockchains that had native cryptocurrency tokens. Today, people are putting all types of financial instruments on the blockchain, including the U.S. dollar.”

Yet, challenges remain around global policy frameworks and the integration of concurrent advances such as artificial intelligence into on-chain ecosystems.

There is a push for a federal framework around stablecoins, and it’s important for industry confidence Levin said.

“Without a federal framework, it is incredibly difficult for financial services firms and international enterprises to really get comfortable in using stablecoins at scale,” he said, adding that as the conversation around crypto regulation evolves, providing clarity, compliance and insight will become more critical.

The Rise of Stablecoins and Changing Adoption Patterns

Chainalysis, a blockchain data company, was founded with a mission to illuminate the traditionally opaque world of cryptocurrency transactions. Over a decade later, it boasts a dataset spanning 70 countries, capable of providing deep insights into how crypto is used, abused and regulated.

As it relates to the growth of stablecoins, tracking real dollars rather than merely crypto tokens has broadened the scope of blockchain monitoring. This evolution has transformed blockchain from a niche technology to a mainstream component of financial infrastructure, Levin said.

“What we are starting to see with OCC guidance and SEC guidance … is that this is something that is going to be possible for banks to do,” he said. “We now track not just cryptocurrency tokens, but … real dollars that are being used to settle financial transactions, remittances and payments all across the world on these rails.”

Still, a persistent criticism of cryptocurrency is its alleged use in illicit activities, and scams and fraud remain separate challenges. Estimates from Chainalysis highlight that between $10 billion and $12 billion worth of cryptocurrency transactions annually are linked to scams.

Chainalysis is uniquely positioned to monitor the entire “supply chain of scam activity,” offering insight into how scammers procure tools and sell illicit services, Levin said.

“We’ve helped the government seize more than $10 billion worth of crypto assets from criminal proceeds,” he said.

There has also been progress made in combatting the use of cryptocurrencies and stablecoins for money laundering and other financial crimes.

“The cryptocurrency transactions that we’ve been able to link to those types of activities is actually a smaller percentage of the overall activity,” he said. “It started off much higher, but now it’s consistently below 1% of the transactions that we can associate directly to these types of actors.”

This decline is largely thanks to improved regulation and the ability of blockchain monitoring tools to help detect illicit transactions more accurately when compared to many traditional financial systems.

Charting the Future of Blockchain Technology

One area of excitement shared by stakeholders within the Web3 ecosystem is the potential for AI to improve crypto literacy and compliance. Despite the inroads blockchain has made to date, widespread misunderstandings about the technology’s opacity persist.

“Even the people who are advocating for the technology … don’t also advocate for the fact that cryptocurrency has been much more effective as a tool for both enterprises identifying risky activity off-boarding bad clients from their platforms and law enforcement being able to hold scammers to account,” Levin said.

Chainalysis itself continues to invest in educating enterprises about how blockchain works, using AI to simplify complex concepts for regulators and industry participants.

“I’m very optimistic about the potential for AI to actually contextualize some of the transactions and concepts for people,” Levin said.

“We still got work to do,” he added. “But the progress is real. And the potential is enormous.”

The post From Fringe to Financial Infrastructure: How Blockchain Became Bankable appeared first on PYMNTS.com.