The future is never certain, but one thing is for sure: the world of cryptocurrency legislation is changing rapidly. By 2022, we could see a very different landscape in terms of how governments and financial institutions treat cryptocurrency and the blockchain industry. There has already been a lot of change across the globe in 2019 and 2020, with some countries starting to embrace the industry and others attempting to ban it.
In this article, we’ll take a look at what’s happened so far in 2020 and 2021, as well as the potential for 2022. We’ll also consider some of the challenges that lie ahead for governments and financial institutions alike with regards to how they treat cryptocurrency.
Finally, we will discuss whether cryptocurrency has a long-term future in the financial world.
The Worldwide Landscape for Cryptocurrency Legislation
In 2019, we saw a number of governments starting to embrace cryptocurrency and blockchain technology. In April, Norway announced plans to explore using blockchain technology for its land registry system. And in February, the Philippines government revealed that they would be using blockchain technology to power the national elections.
However, it hasn’t all been good news. In September 2019, China announced that it had successfully created a prototype for its own cryptocurrency and was looking into ways of implementing it on a wider scale. France also revealed in June 2019 that they would be banning the purchase of Bitcoin via credit card.
The US has also seen some big changes. In June 2019, the SEC announced that it would be allowing Bitcoin ETFs to be traded on the stock market. That same month, Ohio became the first state in America to allow businesses to pay taxes in Bitcoin.
That might sound like an incredibly fast pace of change – and it is – but it’s still not as fast as the pace of change that has happened in 2021.
In 2021, Switzerland began to accept Bitcoin as legal tender and had begun to use blockchain technology for record-keeping purposes by the end of the year. Canada also announced plans to launch its own state-backed cryptocurrency, called CADcoin, which would be used for inter-bank payments.
Government attitudes around the world seem to be changing as quickly as cryptocurrency is developing technologically. In April 2021, a senior banker from France warned of a global recession if central banks don’t replace physical money with digital currency, and China announced that it was going to allow peer-to-peer crypto trading later in the year.
The US has also seen some big changes in 2021. In June, the SEC ruled that Ethereum and Bitcoin were not considered securities and would no longer be regulated as such. At the same time, the IRS decided that tax on crypto profits made in 2019 would only need to be paid retrospectively and not until December 2022.
By the end of 2021, Japan had implemented a new national strategy that would see the Japanese Yen lose its position as the global reserve currency by 2030. Since more than 80% of all fiat currency is held in cash, it’s no surprise that this news sparked some concern among investors!
A Huge Number of Challenges for Governments and Financial Institutions
Even though it seems as though governments and financial institutions are embracing cryptocurrency, that doesn’t mean it will be a smooth ride.
In fact, there is a huge number of challenges ahead for both governments and financial institutions. In July 2021, an IMF study concluded that cryptocurrencies could pose a threat to the stability of the international monetary system. This news had a big impact on cryptocurrency prices, which took a significant hit.
The IMF stated that cryptocurrencies would increase competition, but also warned of their volatility and lack of central bank oversight. Since the study was published in July 2021, that volatility has not abated.
In April 2021, an official from the US Treasury warned Congress of the need to regulate cryptocurrency and claimed that it posed a risk to international security due to its ability to be used anonymously by criminal organizations.
Many countries want some oversight over cryptocurrencies, but most states are worried about stifling innovation and putting themselves at a competitive disadvantage. Nobody knows exactly what the future holds, but we will find out very soon!