Crypto regulation remains the main concern. After reaching new all-time highs last fall, Bitcoin (BTC), Ethereum (ETH-USD). And other cryptocurrencies continued to roar into 2022, despite being in a bear market.
According to one market strategist, regulatory pressure on cryptocurrencies. May continue indefinitely in the future.
In a recent interview with Yahoo Finance Live, Jeffrey Wang. President of the Americas for the Amber Group, stated that. “Regulation is still the biggest overhang in the markets for crypto and blockchain”.
But Wang is heartened by the fact that the Securities and Exchange Commission (SEC). It is moving forward with more specific recommendations on what will be tolerated in the future.
“We are pleased with the regulation,” he stated. “We appreciate the restrictions. Which will allow everyone to compete on an even playing field.”
Regulations come at a time when cryptocurrency traders are still nervous about the Federal Reserve. Reducing stimulus and boosting interest rates. Traders are concerned about what will happen in the stocks markets. If interest rates increase and government stimulus is reduced or eliminated.
In 2022, Wang anticipates greater regulation, notably in the area of stablecoins.
According to Wang, “I believe that more retail investors will become familiar with stablecoins. And understand how they work, trade them, and realize that you can generate. More yield from a stablecoin than you can from fiat cash. But also I believe that’s one of the reasons why it will become more regulated. Which I welcome.”
That means liquidity and transparency
Following a report released last fall by the President’s Working Group on Financial Markets. The group advised that stablecoins be issued only by banks. And tasked Congress with developing a new regulatory framework for stablecoins.
A similar directive was sent to regulators, who were ordered to operate. Within the scope of their current authorities in order to regulate stablecoins. According to some observers,. This leaves the door open for SEC Chair Gary Gensler to regulate stablecoins. In the same way that money market funds regulated now.
Several cryptocurrency experts, including Gensler. Have suggested that they believe stablecoins and many aspects of cryptocurrencies. Fulfill the criteria for categorized and regulated as securities.
“The Securities and Exchange Commission (SEC) will attempt to regulate stablecoins. In 2022 in a manner similar to that of money market mutual funds.” Cowen Analyst Jaret Seiberg said. That entails liquidity and disclosure obligations, among other things.
Sherrod Brown (D-OH), chairman of the Senate Banking Committee. Told Yahoo Finance last month that he is open to the notion of allowing. Only insured depository institutions (i.e. banks) to issue stablecoins.
However, he believes that stablecoins should integrated into the financial system. And regulated in accordance with current banking regulations. But that stablecoin issuers should be transparent about their reserves at the bare minimum. Brown and his staff are presently contemplating whether to propose legislation. On stablecoins in the New Year, as well as engaging with regulatory authorities.
Proposed legislation for Crypto Regulation
In an effort to completely integrate digital assets into the financial system. Senator Cynthia Lummis (R-WY) will introduce a bill regulating crypto.
Her bill would create a new crypto regulating agency under the CFTC and SEC’s jurisdiction. It would also define asset classes, tax crypto, and safeguard consumers.
“We will probably incorporate fundamental crypto functions. Into existing rules and regulations,” Wang remarked. As a result, both the market and regulators will need to adjust. To better reflect the innovation of crypto.
In the coming weeks, the Treasury also expected to clarify who qualifies. As a crypto broker under the 2017 infrastructure bill. The IRS will require you to record capital gains or losses.
Bitcoin fell below 40,000 for the first price since September 2021. On Monday before recovering back.