So, what will we see for crypto regulation in 2022?
As the cryptocurrency industry develops into a more mature asset class, calls for digital asset regulation grew in 2021.
Many larger organisations, businesses, and even governments are hesitant to enter the industry due to volatility. It is hoped that cryptocurrency regulation will bring peace of mind to the broader markets, potentially leading to increased investment in the industry.
However, some fear that regulation could stifle the space’s growth and development, especially if regulation has a negative impact on digital assets.
In 2022, there are some policy areas that we expect to see substantial movement across international borders.
Focus on Stablecoins
Stablecoins – assets pegged to the value of a denominated currency – are one of the more exciting asset classes in cryptocurrency. Due to versatility and function, they emerged as a frontrunner in real-world adoption and use-cases.
Stablecoins such as Tether (USDT) and USD Coin (USDC), sheltered from the worst volatility due to their pegged value, have demonstrated that they can be reliable safe-haven assets for users across the crypto space.
However, for them to be used on a larger scale by global entities and governments, they must be regulated appropriately.
Because of the fluctuating value of the US dollar in the face of rising inflation, many predict that stablecoins will be the first asset class within crypto to be appropriately regulated.
This may be a double-edged sword for the industry, as increased use of stablecoins would naturally draw more attention. Still, it could also lead to many investors shying away from the assets if they are regulated negatively.
Regulation of Wider Digital Assets
Calls for greater regulation of digital assets have come from the top levels of economic policy, including the IMF. They are described as a “financial stability concern” by some. With volatility also a cause for concern, regulators will be eager to address the volatile nature of digital assets, which can experience significant price swings.
Regulation in 2022 is expected to protect retail consumers from losses by regulating exchanges that have faced the arduous task of appeasing governing bodies and authorities. In 2021, three leading exchanges – Gemini, Binance, and Coinbase – collaborated closely with regulators. Additional regulation may be required to alleviate any concerns about the safety and security of assets offered by them.
DeFi Regulations
As the DeFi sector grows rapidly, regulators in the world’s financial markets are scrambling to keep up.
Thailand’s Securities and Exchange Commission is conducting research to develop guidelines for DeFi and digital asset fund managers and consultants to protect consumers from manipulation and cyberattacks, according to Vilaiporn.
The SEC recently issued a set of regulations that prohibit digital asset business operators from promoting the use of digital assets as payment. Regulation is fully implemented from April 1, 2022.
Conclusion
In conclusion, when it comes to crypto regulation in 2022 and the regulatory environment this year, it remains somewhat uncertain on a country-by-country basis.
Countries like Russia and Brazil have given an early indication of what to expect. Other countries, like El Salvador, have embraced cryptocurrencies such as Bitcoin and implemented their own regulations.
Countries like the USA and India have laid out plans in the form of infrastructure and legislation bills. Many anticipate these will be positive, barring any significant shifts in their attitudes toward digital assets.
