In the ever-evolving landscape of finance, cryptocurrency stands out for its potential to transform how we transact and manage wealth. With blockchain networks offering transaction finality in mere seconds—unlike traditional systems such as SWIFT, which can take days—crypto promises a future-ready financial ecosystem. Yet, as we pivot towards this digital frontier, security concerns cast a long shadow, threatening to undermine the sector’s promise.
The Promise and Peril of Crypto
Cryptocurrency’s technological prowess is undeniable. Fast, efficient, and scalable, blockchain networks are poised to meet the demands of real-world mass adoption. U.S. Treasury Secretary Bessent’s projection that stablecoins alone could reach a market size of $3.7 trillion by 2030—equivalent to Germany’s GDP—highlights the disruptive potential of digital currencies.
However, this technological marvel is marred by a significant flaw: security. The crypto industry is on track to lose approximately 4% of its total value locked to hacks in 2025. In the first half of the year alone, over $2 billion was siphoned off by cybercriminals, projecting annual losses to surpass $4 billion. If such losses were sustained in traditional finance, the system would likely face catastrophic failure. Yet, the crypto world carries on, grappling with why major financial institutions like JPMorgan remain hesitant to fully embrace blockchain for their balance sheets.
Beyond Immediate Theft: The Ripple Effect
The immediate financial loss from hacks is just the tip of the iceberg. The aftermath burdens the entire crypto ecosystem. Hacked protocols often suffer a median token price decline of 52% over six months, with long-term price suppression persisting beyond that. For an industry aspiring to manage the world’s wealth, these staggering loss rates pose an existential threat. To unlock the floodgates of institutional investment and bring the next trillion dollars on-chain, reducing hack rates below 1% is imperative.
The North Korean Threat
Among the most sophisticated adversaries in the crypto security landscape are North Korean hackers. Known for their expertise in social engineering, they target development teams of newly funded projects. The infamous Radiant Capital hack, where $50 million vanished due to malware compromising transaction signing devices, serves as a chilling reminder of the threat’s potency.
The irony is that the crypto community possesses the tools to thwart these threats. AI-driven monitoring systems can preemptively address critical security issues, catching vulnerabilities that human auditors might miss. Elite Web3 security researchers provide auditing services, delivering tailored security reports. Yet, many projects skimp on comprehensive security measures, opting instead for a single pre-launch audit and offering rewards for identifying vulnerabilities at a mere 1% of funds at risk, when a more prudent 10% would be advisable.
Security: A Solvable Engineering Challenge
Reducing hack rates below 1% is not just a goal but an engineering challenge we already know how to tackle. The solution lies in adopting a robust security stack that includes continuous monitoring, appropriately priced security rewards, and AI-powered threat detection. The cost of these measures is trivial compared to the potential losses they aim to prevent.
Traditional banks and institutions are keenly aware of these hack rates. Their cautious approach stems from a pragmatic analysis of risks versus rewards. Until the crypto industry demonstrates a commitment to security that matches its technological ambitions, institutional capital will remain hesitant, opting instead for the safety and familiarity of traditional financial systems.
The Path Forward
Crypto’s resilience is evident. It has weathered market crashes without succumbing to systemic bad debt, showcasing its technical robustness. However, security cannot remain an afterthought. The choice is clear: either the industry adopts the advanced security tools already at its disposal or risks losing out on institutional investment opportunities while inadvertently funding cybercriminal activities.
The road to making crypto ready for primetime involves more than just technological innovation. It requires a holistic approach to security, one that prioritizes long-term stability over short-term gains. As the world watches, the crypto community stands at a crossroads, faced with the challenge of redefining its future in a way that balances innovation with safety.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
