By the looks of it, we are in for an intense year in terms of cryptocurrency regulation and policymaking.
As Alex Tapscott said, 2021 was the year that many governments and legislators finally began to wake up to the transformative potential of blockchain technology. Indeed, the pervasiveness of cryptocurrencies globally and their growing market capitalization have made it difficult for power brokers to ignore them and have made them a prominent economic, social, and political issue in many key jurisdictions. From the looks of it, we are in for an intense year in terms of regulation and policymaking around cryptocurrencies.
Stablecoins, an asset class that attracted a fair amount of regulatory attention in 2021, are sure to continue to be in the spotlight this year. For most nations, stable value crypto assets will represent competition for their sovereign digital currencies. For the United States, a key question is whether Congress will introduce the legislation around stablecoins that the President’s Task Force on Financial Markets is calling for.
It will also be exciting to see how far the political mobilization and lobbying efforts of the crypto industry can go this year, something that became a prominent feature of the crypto policy landscape in 2021. An important proof of the new political influence of the cryptocurrency industry. sector will be scrambling to amend crypto-related provisions in the recently passed infrastructure bill.
Many industry experts surveyed by Cointelegraph expect significant political breakthroughs from the European Union in 2022. The European Commission is currently reviewing the crypto asset markets regulation proposal, a far-reaching framework that primarily focuses on mitigating consumer risks and financial stability associated with the adoption of digital assets. Combined with the digital euro tests that are underway, this suggests that the EU could soon articulate its positions on various interconnected parts of the digital asset ecosystem – CBDCs, private stablecoins, and decentralized cryptocurrencies – in a more definitive way.
In other parts of the world, El Salvador maintains the perception that it is totally in Bitcoin (BTC) as a nation-state. One of the many points of controversy related to this great experiment has been, and will continue to be, the dispute between the Central American nation and global financial organizations such as the International Monetary Fund. Speaking of global gatekeepers, it is reasonable to expect these gatekeepers of the established financial order to start delving into specific sectors of the cryptocurrency space, such as the Bank for International Settlements’ recent foray into decentralized finance. The hope is that the resulting alarmist narrative does not become the dominant focus of global regulators in DeFi’s sprawling domain.
The early days of 2022 also brought a reminder that regulatory clarity is not the only way that politics can massively affect the cryptocurrency space. Following days of civil unrest in Kazakhstan – a nation that had risen to # 2 in the world ranking for Bitcoin’s hash rate after China’s mining ban – the government’s decision to cut off internet access to the entire nation. population caused an unprecedented drop in the hash rate on the Bitcoin network. The geopolitics of BTC mining, which got under way last year with the abrupt exit from China, appears set to continue down the path of volatility.
Ultimately, this year is shaping up to be a rollercoaster of Bitcoin politics, cryptocurrency regulation, and digital currency adoption. Let’s buckle up and see what else 2022 has in store for us.