Central Bank Digital Currencies, Regulations ’22. will be trends to watch in

In the second half of 2020, large institutional investors began buying bitcoin, with business intelligence firm Microstrategy announcing a $250 million purchase of bitcoin. Several large institutional players and major global banks, such as Morgan Stanley, Goldman Sachs, JP Morgan and BlackRock, entered the space offering exposure to crypto assets to their clients. The first bitcoin ETF was approved by US regulators and listed on the New York Stock Exchange in October.

The increase in interest from institutional investors was primarily due to a clear regulatory framework for crypto assets in the jurisdiction, which increased institutional-grade custody and infrastructure providers within the space, and a decentralized finance (DeFi) ecosystem, which enabled institutional investors to provides opportunities for generate alpha. 2021 saw a significant increase as the total value locked (TVL) in DeFi market cap crossed $250 billion in the first week of November.

Innovation in the blockchain industry is growing rapidly. Non-fungible tokens, or NFTs, have been the major use case for crypto that emerged in 2021, with millions of users exposed to NFTs through digital arts, games, and gaming. Some of the major crypto trends that we expect to see in 2022 are…

Central Bank Digital Currencies (CBDC)

China was the first country to operate its own digital currency, the digital renminbi (or e-CNY), work for which began in December 2017. Subsequently, several countries are exploring and announcing the idea of ​​a national blockchain-based digital currency to improve upon. cross-border trade. It is highly likely that 2022 could be the year where we may see more countries launching their own CBDCs. As countries experiment with digital currencies, for example Singapore’s Project Ubin, Canada’s Project Jasper and the Digital Euro in the European region, this provides an opportunity for India to be a part of the global digital ecosystem and introduce its own CBDC. does. CBDCs can play an important role in supporting the government’s public policy objectives for direct transfer of profits due to the transparency that blockchain provides.

Structured crypto rules across jurisdictions

Providing investment protection and fostering innovation is important from the perspective of the government as more people are investing in cryptocurrencies.

Stablecoins and DeFi will be major focus areas under the regulations. Over 18 different laws related to cryptocurrencies were introduced by the US government in the first half of 2021 alone.

As more countries introduce CBDCs and regulate the industry, the domino effect will prompt other countries to integrate crypto as a part of their financial systems. Regulations are also important for blockchain startups to assess risk management strategies for the safety of their consumers and the financial conduct of their operations. Regulatory uncertainty could kill innovation as governments across the world intensify efforts to embrace innovation.

India is also taking measures to regulate the crypto industry and provide more clarity to investors and crypto businesses. The technology is more likely to bring in a positive and progressive regulatory framework to promote and support innovation.

Integrating crypto with traditional finance/payments

One of the most prominent trends in the crypto industry in 2021 is the adoption of crypto as a means of payment and the way traditional institutional investors offer crypto services to their clients. The low transaction fees, increased transaction speed and efficiency that blockchain provides are unparalleled, and companies such as PayPal, Mastercard, Visa, Venmo, and even Twitter allow customers to transact in bitcoin and other cryptocurrencies. permission has been granted. This is the beginning of larger financial institutions offering crypto exposure to clients and we expect more players to offer crypto exposure to clients in 2022.

We also anticipate that Coinbase’s successful IPO on the NASDAQ will lead a number of crypto companies, from exchanges to digital assets and payments companies, to launch their IPOs in 2022.

Be it financial services, gaming, arts or any other industry, blockchain technology can be applied almost everywhere.

Sumit Gupta is the co-founder and CEO of crypto unicorn CoinDCX.