Crypto sentiment mixed amid global uncertainty

13 Mac 2022

BTCUSDT

Where could things be headed? Let's take a look

• Biden signed in the Long-awaited Digital Assets Executive order this week calling for the regulation of Crypto and the development of a CBDC for the U.S.

• Crypto saw some of it's highest inflows last week in nearly three months.

• Ukraine using crypto wallet to accept donations putting crypto to a true real world test.

• Russia’s State Duma Opposes Total Crypto Ban, Urges for Regulations.

• Trading volume for alt-coins has dipped, investors buying more into Bitcoin and Ethereum for less volatility.

• Coin base has blocked over 25,000 Russian accounts trying to avoid sanctions, CEO has stated they will not ban Russia from crypto unless asked to by the government.

Why the executive order is a positive for crypto

For a while now investors have been waiting for the U.S to engage in the regulation of crypto as it would essentially bring crypto to a new degree of safety and aid in facilitating mass adoption. For the most part that's true, financial regulation on behalf of the U.S government would bring crypto into a new hemisphere, one which people have been longing for. For many people, crypto is viewed as a risk, the money you invest isn't backed or protected if you lose it, there are a lot of rug pulls and scams in Altcoins and NFT's, and many other examples. What the regulation of crypto will do is make crypto not only safer from scams and rug pulls, but it will also be the governments way of saying; "Hey, this is something real, and it's got real value". One of the most important factors however is that most large financial institutions are hesitant to buy something that isn't under the governments regulation as they can get struck with fines or worse with the XRP vs SEC case being an example as many institutions sold their XRP to avoid getting fined or worse for owning what the SEC was calling "unregistered securities". While this isn't necessarily the case for crypto, if there is even a small chance, institutions won't take the risk. Not to mention crypto is still in a grey area financially for most of these financial institutions. So for the government to implement oversight of crypto as well as recognize it as a legitimate asset and regulate it, that will make it much safer and easier for these major institutions to finally jump in and will lead to an increase in institutional adoption of crypto by these major players this year. An executive order that provides more legal clarity on government oversight would be a positive for crypto in the long term most definitely.

Less Scams?

For most hesitant or doubtful people, this regulation puts some worries at ease as government intervention gives them a sense of security they didn't have before. There are a lot of things that can change and most definitely will. For example, rug pulls and pump and dump schemes won't work as well for those that think it'll be a quick buck. The government will start to hone in on those individuals and they'll be sure to get those that try to promote pump and dumps as well as scam projects. Everyone knows the IRS loves getting their money, and you can bet they'll love even more getting those individuals.

The U.S to take the Crypto lead

As noted in a joint statement on Wednesday: "That will help position the U.S. to keep playing a leading role in the innovation and governance of the digital assets ecosystem at home and abroad, in a way that protects consumers, is consistent with our democratic values and advances U.S. global competitiveness". What this means essentially is that the U.S is looking to take on the head of the role for crypto and wants to be seen as a crypto safe haven as well as play the leader role in it's development and future. This is incredibly important is it paves a very bright road and future for crypto's recognition, especially in the U.S and it'll be likely that soon other countries will follow in lead.

Development of a new digital dollar

One of the request in the executive order was that the government research into the creation of a CBDC, Digital U.S Dollar. 9 countries already have created their own CBDCs with more than 100 researching issuing their own digital currency. An important fact is that CBDCs will be “central bank money,” or a liability of the central bank. That would make it different from current digital money, like money held in banks or payment apps, which are a liability to commercial banks, the Fed says. According to the Fed, “a CBDC would be the safest digital asset available to the general public, with no associated credit or liquidity risk.” While this is major, it's likely that we won't see a digital dollar anytime soon, but the executive order paves the way for the government to do more and go beyond it's current research and have more action in the crypto space by which then we will likely see the U.S Digital dollar come to fruition.

Mass Adoption

With the order paving the way for increasing the governments involvement in crypto as a whole it is likely that this year will see more mass adoption across the board as other countries follow in suit and develop/research their own digital coins in hopes of 'keeping with the times' and the rapidly increasing implementation of crypto. So with regulation not only will we see more people start to take the plunge into crypto but more importantly major players and financial institutions will be happy to jump in with more legal clarity. So 2022 will most definitely see some pretty good developments and inflows in the crypto space. Very positive.

Russian Crypto?

Earlier in the year Russia's central bank 'The Bank of Russia' made a statement that crypto was a threat to it's financial system and proposed a complete blanket ban on crypto as a whole. However recently the lower house of Russia's parliament as well as it's Financial Ministry have made it clear that they view crypto regulation as a better step rather than a blanket ban. Putin even made a few comments noting that Russia would stand to benefit from the industry and the mining sector in specific. KYC implementation was one of the most important rules that Russia would need the government body noted recognizing that other countries already have similar legislation and Russia should not fall behind.

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~ Rock