• Cryptocurrencies have seen soaring highs and painful lows in the past year, reaching a peak market cap of $3 trillion in 2021 and dropping to less than a third of that value in 2022.
• Several major crypto events have occurred in the past year, including the implosion of the Terra stablecoin ecosystem and bankruptcies of Three Arrows Capital, Celsius Network, Voyager Digital and BlockFi.
• Regulatory initiatives are underway to expand oversight of the cryptocurrency industry.
The cryptocurrency industry has experienced a roller coaster of a year in 2021-2022. From soaring highs to painful lows, the crypto market has seen it all. In 2021, the market capitalization of the crypto space reached a peak of $3 trillion, only to drop to less than a third of that value in 2022.
The past year has seen some seismic events for the cryptocurrency market. The implosion of the Terra stablecoin ecosystem sent shockwaves around the industry and has called into question the sustainability of stablecoins. In addition, a number of major players in the crypto space declared bankruptcy, including Three Arrows Capital, Celsius Network, Voyager Digital, and BlockFi.
In light of these events, regulatory initiatives are underway to expand oversight of the cryptocurrency industry. Governments and financial regulators around the world are looking to establish clear and consistent frameworks for cryptocurrency-related activities. The U.K. Financial Conduct Authority (FCA) is leading the charge, developing a range of measures to regulate the crypto space. These include the establishment of licensing regimes for cryptocurrency exchanges and custodians, as well as the introduction of anti-money laundering and know-your-customer requirements.
The U.S. and Europe are also taking steps to regulate the crypto space. In the U.S., the Securities and Exchange Commission (SEC) has proposed a new framework to regulate cryptocurrency exchanges and custodians, while the Commodity Futures Trading Commission (CFTC) has proposed its own framework to regulate derivatives and other cryptocurrency activities. Meanwhile, the European Commission has announced plans to introduce a harmonized framework for crypto assets across all member states.
It is clear that governments and financial regulators around the world are beginning to take a more active role in regulating the crypto space. This is a positive development for the industry, as it will help to reduce the risk of fraud and other criminal activities, and ensure that the cryptocurrency market is operating in a safe and transparent manner. As the industry continues to grow, it is important that governments and regulators continue to work together to create an effective and robust regulatory framework.