Central bank digital currencies, regulations will be trends to watch in ’22

In 2021, the crypto industry grew exponentially as Bitcoin hit all-time highs, rising from $ 29,000 at the start of the year to $ 68,000 in October, up 130%.

In the second half of 2020, large institutional investors began buying Bitcoin, with business intelligence firm MicroStrategy announcing the purchase of Bitcoins worth $ 250 million. Many large institutional players and large global banks, such as Morgan Stanley, Goldman Sachs, JP Morgan and BlackRock, have entered the space, providing exposure to crypto assets to their clients. The first Bitcoin ETF was approved by U.S. regulators and listed on the New York Stock Exchange in October.

The growing interest from institutional investors was mainly due to clearer regulatory frameworks for crypto assets in all jurisdictions, which increased institutional grade custody and infrastructure providers in the space, and a funding ecosystem. booming decentralized (DeFi), which offers institutional investors opportunities to generate alpha. 2021 saw significant growth as the Locked-In Total Value (TVL) of DeFi market cap crossed $ 250 billion in the first week of November.

Innovation in the blockchain industry is growing rapidly. Non-fungible tokens, or NFTs, have been the primary crypto use case that emerged in 2021 with millions of users exposing themselves to NFTs through digital art, sports, and games. Some of the major crypto trends that we expect to see in 2022 are …

Central Bank Digital Currencies (CBDC)

China was the first to pilot its digital currency, the digital renminbi (or e-CNY), whose work began in December 2017. Subsequently, several countries explored and announced the idea of ​​a national digital currency. based on blockchain to improve cross-border commerce. There is a huge possibility that 2022 will be the year when we will see more countries launch their own CBDCs. As countries experiment with digital currencies, for example Singapore’s Ubin project, Canada’s Jasper project, and the digital euro in the European region, this offers India the opportunity to be part of the global digital ecosystem. and introduce its own CBDC. CBDCs could help support the government’s public policy goals for the direct transfer of benefits due to the transparency offered by blockchain.

Structured crypto regulations in all jurisdictions

Protecting investments and promoting innovation is important from a government perspective as more and more people invest in cryptocurrencies.

Stablecoin and DeFi will be the main areas of intervention in the framework of the regulation. More than 18 different cryptocurrency laws were introduced by the U.S. government in the first half of 2021 alone.

As more countries introduce CBDCs and regulate the industry, a domino effect will lead other countries to integrate crypto into their financial systems. Regulations are also important for blockchain startups to assess risk management strategies to protect their consumers and the financial conduct of their operations. Regulatory uncertainty can kill innovation as governments around the world step up efforts to embrace innovation.

India is also taking steps to regulate the crypto industry and provide more clarity to investors and crypto firms. It is more likely to introduce a positive and progressive regulatory framework to promote technology and support innovation.

integration of crypto into finance / traditional payments

One of the most significant trends in the crypto industry in 2021 has been the adoption of crypto as a means of payment and traditional institutional investors offering crypto services to its clients. The reduced transaction costs, increased transaction speed and efficiency offered by blockchain are unprecedented, and companies such as PayPal, MasterCard, Visa, Venmo, and even Twitter, have started allowing customers to transact online. Bitcoin and other cryptocurrencies. This is just the start of large financial institutions offering crypto offerings to clients and we expect more players to offer crypto exposure to clients in 2022.

We also predict that Coinbase’s successful IPO on the NASDAQ will lead many crypto companies, ranging from exchanges to digital asset and payment companies, to launch their IPOs in 2022.

Whether it is financial services, games, art, or any other industry, blockchain technology could be implemented almost anywhere.

Sumit Gupta is the co-founder and CEO of crypto unicorn CoinDCX.

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