“Nobody knows how cryptocurrency will evolve in 2022, but one thing remains clear,” writes Jonathan Levin, co-founder and chief strategy officer at Chainalysis, in the PYMNTS eBook “Endemic Economics: 32 Payments Execs on the ‘Next Normal’ That Never Happened” — it’s here to stay. But only time will tell how the world will react to new market moves, regulations, and digital asset innovations.
In 2021, the terms crypto, DeFi, Web3 and non-fungible tokens (NFTs) became a staple of internet conversation. Regulation and experimentation will evolve to make 2022 an even bigger year for cryptocurrency.
On the regulation front, new guidance on virtual assets from the Financial Action Task Force is expected to move many countries toward the implementation of important anti-money laundering (AML) policies. We’re also seeing digital asset taxation on top of many lawmaker’s minds. Reporting requirements are being introduced, both domestically in the U.S. in provisions within bills like the Infrastructure Investment and Jobs Act and internationally through information exchange mechanisms like those being built by the OECD.
As for experimentation, the growth of stablecoins and the growing interest in central bank digital currencies (CBDCs) have revealed many governments’ hunger for financial innovation. Governments around the world are now thinking hard about how to harness the advantages of blockchain technology while providing adequate oversight and controls.
And perhaps most importantly, longstanding myths about cryptocurrency are finally being busted. The widespread belief that digital assets are anonymous, untraceable and mainly used by criminals is fading. Research conducted by Chainalysis has shown that, in 2021, a paltry 0.15% of crypto transactions had ties to illicit activity. This is mainly due to the massive global adoption of crypto for legitimate purposes outpacing its criminal use.
While nobody knows how cryptocurrency will evolve in 2022, one thing remains clear; it’s here to stay. Only time will tell how the world will react to new market moves, regulations, and digital asset innovations. However it unfolds, Chainalysis will continue on its mission to prevent crime, protect users and build trust in blockchains.
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