Regulation is one of the most discussed topics in crypto. In fact, major industry updates this year were regulation based, which included:
- El-Salvador – making Bitcoin a legal tender currency
- The United States’ SEC approval of an ETF Bitcoin
Will those new trends and breakthroughs stop in 2022? We don’t think so. We see more to come, especially globally.
For example, expect small countries to follow El-Salvador’s route and legalize Bitcoin as tender. With larger countries, expect them to slowly legalize it, albeit in ETF form.
But what about the details? Also, are there any trends or milestones you should be aware of?
There are. We’ll discuss those below…
#1 – China’s Love-Hate Stance on Bitcoin
China was one of the first proponents of crypto right back when Bitcoin first launched.
But over time, this would change. China would introduce harsher regulations and crackdowns on exchanges, many did last year.
In fact, 2021 saw one of the largest purges of Chinese mining and exchanges thus far.
For China, this is a matter of economic stability. However, this may end up being beneficial for competitors exploring crypto – those being the US and other territories.
India isn’t too far behind. Late 2021 saw Indian regulators cracking down on domestic crypto use.
India is expected to launch a crypto bill that regulates digital asset use in the country. And with India boasting the highest crypto user counts worldwide, that bill may affect cryptocurrency prices as a whole.
However, assuming the bill regulates (without banning) crypto, then that’ll be a good sign. It’ll increase official recognition of crypto, which will increase user trust in them, thus stabilizing its markets.
Basically – 2022 shouldn’t be different from the preceding years. While regulations will increase globally, the goals will be different for each territory.
#2- DeFi’s Growth
DeFi’s are a revolution in both internet use and the gaming industry – combining crypto and blockchain into their infrastructure.
With DeFi slowly becoming mainstream, regulators will turn their attention towards them. In fact, the recent troubles Coinbase had with SEC regulations are a sign that DeFis are up next.
So far, regulatory bodies haven’t clarified their view on that industry. This hade made retail populations afraid of joining, making it a serious opportunity cost for DeFi businesses.
This should change with the nationwide adoption of crypto – similar to El-Salvador…
#3 – El-Salvador’s Crypto Adoption
One of the boldest moves a nation could make is to adopt an entirely new currency as legal tender.
El-Salvador recently made that a reality, making Bitcoin legal tender, and forcing businesses to accept it (in addition to US dollars) are currency.
And while Salvador is small, the impacts are profound. The announcement triggered concerns from the Bank of England, IMP, and the Federal Reserve of El-Salvador’s declaration.
While larger countries like the US won’t follow El-Salvador’s example of legalizing Bitcoin, smaller countries will.
US regulators seem to understand that. And as a result, they’re now treating Bitcoin like an asset (similar to gold), instead of it being security or currency.
After all, while fiat currencies are backed with debt, Bitcoin is only backed by its utility, permission-less use, and hard to inflate system.