The crypto world has had a banner year in recent years, with terms like Metaverse, NFT, DeFi, scaling solutions and more. But it’s not just cryptographic vocabulary that has evolved. Popular crypto assets have reached new heights, institutional investors have gone mad, and governments have become more receptive to specific cryptos.
The People’s Bank of China, the monetary authority of Beijing, released a statement on Sept. 24 claiming that cryptocurrencies do not have the same status as traditional monetary instruments. The notification, which was issued in conjunction with nine other government agencies, including the Public Security Bureau, declared all related operations illegal and warned that bitcoin transactions from outside China would be treated similarly.
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According to data platform Chainalysis Blockchain, more than $50 billion worth of cryptocurrencies left accounts in East Asia to destinations outside the region between 2019 and 2020.
Because China has such a large presence in East Asian cryptocurrency exchanges, Chainalysis believes that much of the net cryptocurrency outflow was due to Chinese capital flight.
While Chainalysis doesn’t have a hard figure on how much money left China between 2019 and 2020, they think it’s in the $50 billion range.
China imposes a $50,000 annual limit on foreign exchange purchases as part of its strict capital controls. As a result, the capital flight enabled by bitcoin is particularly noteworthy.
Previously, wealthy Chinese evaded capital regulations by buying foreign real estate, inventing new ways to charge for international trade, and even forcing their employees to transfer money to foreign bank accounts.
Residents of China have been able to buy foreign assets faster and without inspection from Chinese authorities thanks to Bitcoin.
Because Bitcoin and many other blockchain-based cryptocurrencies are decentralized, they can be used to bypass capital controls much more easily than a traditional money transaction that relies on the banking system.
According to the official Chinese news agency Xinhua, cryptocurrencies have disrupted the financial systems of the regulated economy and contributed to crimes such as money laundering, leading to the ban.
Cryptocurrencies, or digital trading tools that are not tied to a central bank, made their debut in China around 2008. In 2013, Chinese banks started banning the use of digital currencies and the rules were tightened in 2016.
China was the largest bitcoin miner in the world and sponsored the largest bitcoin exchange by volume. According to numerous reports, many of the people who made millions when Bitcoin prices soared four years ago are located in China.
In the race to limit but take advantage of cryptocurrencies, Australia has emerged as a potentially “crypto-friendly” country. The Senate Committee on Australia as a Technology and Finance Center released a report in October approving cryptocurrencies.
It offers crypto exchange market licensing, simplified taxation and a regulatory structure for “decentralized autonomous organizations” or DAOs.
These function similarly to decentralized cryptocurrency networks in terms of self-government, using blockchain technology and cryptocurrency tokens to manage participation and enforce regulations.
Australia’s choice is to harness the immense economic potential of decentralized digital assets. It remains to be seen how this will affect the national economy. However, we can expect politics to influence the results if history is a lesson to be learned.
As the physical real estate industry saw limited adoption due to covid risks, a concept of “virtual land” emerged. Blockchains such as Decentraland and Sandbox have grown in popularity in 2021, allowing investors and participants to purchase virtual land, resources, digital assets and other items using utility tokens such as MANA and SAND.
For this reason, Metaverse, the most famous buzzword of 2021, has gained popularity.
Despite meme coins being famous in 2021, individuals have come to look at these trendy crypto readers with a critical eye. As one progresses to 2022, the relevant range for a meme coin or other volatile crypto asset seems to be more determined by value criteria such as trading volume, global market cap, etc.
Additionally, with several tokens set to be seen as Web 3.0 crusaders in the coming years, the value versus hype scenario is likely to continue.
Despite releasing “Crypto Hype” behind the scenes in 2021, Elon Musk’s cryptic innuendo and tweets were unstoppable. In 2021, however, Tesla took a positive step by purchasing $1.5 billion worth of BTC, giving investors reason to be optimistic about the future of the largest crypto player by market size. Microstrategy agreed with Tesla’s bold goal of putting BTC on its balance sheet, making 2021 a great year for institutional buying.
In September 2021, Bitcoin was recognized as legal tender in El Salvador. While this is the most significant event in terms of establishing the legitimacy of crypto, other countries, such as Zimbabwe, may urgently consider similar issues in 2022.
The highlight of November was the overall crypto market cap, overtaking Apple and Microsoft by more than $3 trillion. In 2022, the market cap of cryptocurrencies could rise much further.
Cryptocurrency is gaining popularity as an economic asset class, technological infrastructure and social experiment in non-state infrastructure.
As a result, crypto communities are gaining influence in public policy discussions. For example, crypto proponents were able to derail a major federal infrastructure law in the United States last year.
However, different jurisdictions follow different paths in policy and regulation.
For example, it is seen by China and Russia as a fiscal and ideological threat to national currencies. Others see it as an opportunity for economic expansion, investment and innovation.
As different ideas emerge, 2022 could be a turning point for the crypto industry and those fighting to ban or welcome it.
Countries that encourage crypto networks have historically reaped economic benefits in the form of innovation, investment, jobs and taxes.
Access to new demographics and technological efficiencies in cash management are two business benefits of adopting crypto as a digital asset.
At the same time, the industry influence on policy and legislation shows that cryptocurrency is not a fully decentralized entity that only exists on the blockchain.
In previous years, these events had a significant impact on the popularity of cryptocurrency. And that’s exactly what keeps investors optimistic in 2022.
While prices will continue to fluctuate due to declining buy-to-sell ratios, it will be the value of the crypto market that will propel it forward. If you are interested in selling crypto, only use trusted places to do so.