Regulatory frameworks are developing gradually as millions of people hold true to the volatile cryptocurrency markets.
The last couple of years have been a rough ride for the cryptocurrency market. Bitcoin plummeted from its peak of over $65,000 in November of 2021 to just over $16,500 at year-end 2022. By the first half of 2023, it had started to climb out of the trenches but remained at less than half its peak value. And bitcoin is only one of the many cryptocurrencies that have risen only to fall from a great height.
CoinGecko estimates that on average, 947 cryptocurrencies listed each year end up failing. 3,322 cryptocurrencies that were listed on CoinGecko in 2021 have failed and are categorized as dead coins. In addition, since the beginning of the crypto winter, marketplaces have come and gone.
But that hasn’t stopped people from owning these assets. Triple-A, a Singapore-based crypto payment provider, estimates that more than 420 million people worldwide are participating in the crypto market. Further, according to CoinGecko, the global market capitalization of cryptocurrencies is about $1.18 trillion, and the global capitalization of stablecoins is just over $130 billion.
Despite regulators’ angst about how risky cryptocurrencies are and their repeated warnings to consumers, they know the crypto horse bolted a long time ago, and these assets have to be brought into the regulatory fold. Progress has been slow, but at least there has been some progress in every region of the world.
Kudos to Europe for being the farthest along the regulatory path. The EU recently passed the Markets in Crypto-assets (MiCA) law, which covers issuers of unbacked crypto-assets and stablecoins, as well as the trading venues and wallets where crypto-assets are held. MiCA will likely come into effect in 2024, and it could be a model for jurisdictions throughout the world.
In North America, Canada is running simulations where cryptocurrencies and fiat currency can coexist. Mexico is considering legislation focusing on how cryptocurrencies can foster financial inclusion. Meanwhile, the U.S. Congress is considering several proposed bills on digital asset regulation.
In Asia-Pacific, Japan has set up the Japan Virtual Currency Exchange Association (JVCEA), a self-regulatory organization that governs digital currency exchanges. Australia is working on a Digital Assets (Market Regulation) Bill. Similarly, the Monetary Authority of Singapore has produced…
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