In this article, we will explore the basics of cryptocurrencies, from Bitcoin and ethereum to stable coins like Ripple. We’ll also discuss the upcoming regulations and laws for the crypto market. Ultimately, we’ll determine whether this market is going to grow or crash. Until then, enjoy reading about the latest tech trends! And stay tuned for part two of this series! We’ll look at the legal gray area surrounding cryptocurrencies, including when they’ll become securities.
The price of Bitcoin is in the process of breaking out of its parabola and it might make another all-time high in December 2022 before it crashes again. Alternatively, it could trend sideways or down in the near future. As the price of bitcoin has risen at a rapid rate over the last three years, it’s natural to wonder when it will finally reach its peak. Thousands of altcoins, a type of cryptocurrency, have plunged 90% or more from their highs in 2018, and some have fallen to $0.02.
Although cryptocurrency has had several market cycles since the first bitcoin was mined in 2009, it has been consistently growing in popularity since then. While critics have criticized the speculative nature of the industry, even its most vocal supporters have lauded the technology behind blockchain. SEC Chair Gary Gensler called the cryptocurrency “a catalyst for change in the financial system,” and most legislators and regulators have noted that they must safeguard the potential of innovation while reining in speculative excesses.
There are two main types of stable coins: fiat and cryptocurrency. Fiat currencies are backed by gold and silver. Cryptocurrencies are backed by ether or other types of electronic cash. A stablecoin is supposed to be more stable than fiat because of this. Traders and investors seek out stable coins during times of high volatility. But what is a stable coin? It’s a virtual currency that supposedly has a one-to-one valuation in U.S. dollar.
A stable coin is a cryptocurrency whose price remains stable in the context of fiat currency. It has a peg to one currency. A decentralized version is a completely different beast. These coins do not depend on centralized financial infrastructure. While some people have questioned the stability of these coins, others have defended them as a secure form of investment. One of these offshoots is called the TerraUSD.
While there are numerous regulatory and governmental agencies assessing the cryptocurrency market, the U.S. is perhaps the one with the most aggressive efforts to regulate it. In January 2022, the SEC proposed new regulations that apply to cryptocurrencies and other “communication protocol systems.” While this proposal does not specifically refer to cryptocurrencies, it could affect regulated and unregulated platforms. However, the timing of this proposed regulation is still too early to predict when the crypto market will increase.
While the year 2021 was a good year for crypto, the year ahead will be a game-changer. Despite the number of era-defining events, the market remained sideways over the past week, as promising crypto players wiped out their gains. Even so, this range-bound market has not dampened the investor sentiment. Meanwhile, leading platforms continued to see a surge in activity over the past week. Meanwhile, new listings have taken centre stage. With so many investors putting their money into crypto, 2022 will be a watershed year for the digital asset industry.
In the future, the UK is likely to make its cryptocurrency market more regulated. The FCA and the UK government have published complementary reform proposals for cryptocurrency. These proposals would make the financial promotion regime of the HM Treasury cover crypto assets, as well as regulations for cryptocurrency mining. However, there is a big question mark over whether or not these proposals will actually have any effect. Let’s see how the laws will affect the market.
First of all, the CFTC and SEC are likely to play an important role in overseeing the cryptocurrency industry. They will be focusing on market structure and potential manipulation. Some prominent members of Congress have expressed concerns about investor protection, and these agencies will be looking to address these concerns. Secondly, the CFPB is expected to give input on potential cases where bitcoin is used for stablecoins. These types of cases will trigger federal consumer financial protection laws.