Future of Crypto
The year 2021 was a watershed moment for cryptocurrencies. But what will happen in 2022?
Bitcoin has experienced many new all-time high prices — followed by significant losses — as well as increased institutional buy-in from prominent corporations. Ethereum, the second-largest cryptocurrency, recently reached a new all-time high as well. New bitcoin restrictions have piqued the curiosity of U.S. government authorities and the Biden administration.
People’s interest in crypto has soared in the meantime: it’s a hot topic not only among investors but also in popular culture, due to everyone from long-time investors like Elon Musk to that kid from high school on Facebook.
According to Dave Abner, head of global development at Gemini, a renowned cryptocurrency exchange, 2021 marked a “breakthrough” in many aspects. “The crypto business is receiving a lot of attention and interest.”
However, the sector is still in its early stages and is continually changing. That’s one of the reasons why every new Bitcoin high is quickly followed by a sharp slump. It’s tough to forecast where things will go in the long run, but experts will be watching issues like regulation and institutional acceptance of crypto payments in the next months to get a clearer market feel.
While it’s tough to make exact predictions, we asked five experts what they’re watching in the crypto industry for the future:
Regulation of Cryptocurrencies
Expect to hear more about bitcoin legislation in the future. Lawmakers in Washington, D.C., and worldwide are trying to find out how to make cryptocurrency safer for investors and less appealing to hackers by enacting regulations and guidelines.
“One of the major overhangs in the crypto business globally is regulation,” says Jeffrey Wang, president of the Americas at Amber Group, a crypto financing firm based in Canada. “We would greatly appreciate unambiguous regulation.”
China declared all cryptocurrency transactions illegal in the country in September, thereby stopping any crypto-related activities within its borders. Things are less obvious in the United States. Chairman of the Federal Reserve, Jerome Powell, has stated that he has “no intention” of banning cryptocurrency in the United States, while SEC Chairman Gary Gensler has repeatedly expressed his agencies and the Commodity Futures Trading Commission’s roles in policing the market.
Investors are “certain to be harmed,” according to Gensler if stronger regulation is not implemented. Furthermore, the IRS has a vested interest in ensuring that investors understand how to report virtual currency on their tax returns. The statements of Gensler and Powell are in line with a growing consensus among the Biden administration and other U.S. politicians that stronger cryptocurrency regulation is required.
Regulation, like most things in bitcoin, is fraught with difficulties. Wang explains, “There are various agencies that may or may not have jurisdiction to monitor anything.” “And it varies from state to state.” Clear legislation would remove a “major obstacle for bitcoin,” according to Wang because U.S. enterprises and investors are now operating without clear restrictions.
What impact could new regulations have on investors?
Crypto tax reporting measures were included in the president’s $1.2 trillion bipartisan infrastructure package, which might make it easier for the IRS to trace crypto activity among Americans. That’s why, even before the new regulation, experts recommend that investors maintain track of any capital gains or losses on their crypto assets. The new regulations may also make it easier for investors to disclose cryptocurrency transactions correctly.
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