Regulatory attitudes towards cryptocurrencies are constantly evolving, often slower than the cryptocurrency industry itself. Without clear and comprehensive regulation, institutions and the general public will not seriously consider the use of cryptocurrencies. In addition, the industry suffers from widespread scams, phishing and hacking, which often have no legal consequences. This bolsters the guts of the outlaws and bolsters Crypto’s image as an arena for shady characters.
In a new report, Cointelegraph Research takes stock of regulations for stablecoins, non-fungible tokens (NFTs), and outlines how they will evolve from the end of 2021. The weekly updated database of new regulations covers all updates for the industry.
NFTs and stablecoins put policymakers to sleep
The NFT boom in 2021 has prompted governments and international organizations to take action. With over $9 billion in NFT sales on Ethereum, the emergence of a clear regulatory environment for NFTs is critical to the future sustainability of the market. In the last quarter of 2021 alone, the NFT market accounted for $1.5 million in illegal activity. While insignificant compared to the scale of money laundering taking place elsewhere, it marks an unfavorable trend that is likely to continue into 2022.
In both the US and UK, authorities have failed to introduce clear guidelines on NFTs, and there is some uncertainty around how the asset class should be classified, although NFT issuers and markets may need to comply with AML and know-your-customer practices.
Cointelegraph Research records all regulatory events around the world in its regulatory database on a weekly basis.
Similar to NFTs, stablecoins catch policymakers off guard. The stablecoin supply has increased fivefold, from $26 billion at the beginning of 2021 to $164 billion by the end of 2021. This growth will continue into 2022, with total supply increasing by 6.8% in the first six weeks of the year.
The Financial Stability Board, an international body that coordinates the work of financial regulators around the world, has called for action on stablecoins in its 2020 and 2021 reports, with July 2022 set for establishment in national jurisdictions Preliminary deadline for the regulatory framework. Stablecoin regulation has become more complex due to the advent of unsecured decentralized USD-pegged stablecoins such as TerraUSD (UST), and regulators do not have a “one-size-fits-all” solution.
Governments are catching up
The report also delves into developments in the first half of 2022. Another area covered is central bank digital currencies. With the progress of CBDCs in no less than 91 countries around the world, governments are beginning to realize the potential of digital currencies. The future is moving forward, and lawmakers have a lot of work to do to create regulations that foster innovation but allow mainstream adoption of digital assets.
CBDCs could potentially improve tax compliance and better track financial transactions, but could seriously hinder cryptocurrency adoption, or even replace some decentralized digital currencies altogether, as they benefit from government agency incentives among many consumers. Stability and trust.
Anyone interested in crypto, blockchain and the future of the industry is welcome to read this report and access a regulatory database that tracks the latest developments. Cryptocurrency needs regulation, but it has to be the right type. With forward-looking regulation that ensures progress can be made, and governments that foster innovation, cryptocurrencies can truly deliver on their promise of a fairer future and an updated financial system.
This article is for informational purposes only and does not represent investment advice, nor investment analysis or an invitation to buy or sell financial instruments. Specifically, this document is not a substitute for personal investment or other advice.