ViaBTC | How will the Tighter Regulations in 2022 Affect the Future of Cryptos?
Regulatory problems have always been the sword of Damocles hanging over cryptocurrencies. The drastic market swings in the crypto space have been, to a varying degree, the result of regulation. Since last year, countries have tightened their crypto regulations to control carbon emissions. According to the relevant data, Bitcoin mining consumes about 139.06 TWh electricity a year, generating carbon emissions of approximately 66.06MT, comparable to that of a smaller country. This runs contrary to the goal of addressing growing concerns like global warming and energy depletion. As such, Bitcoin mining is illegal in certain countries.
However, considering the broad consensus for this cryptocurrency and its borderless features, it is very difficult for state regulators to ban Bitcoin once and for all. Such a sweeping approach will only lead to more illegal activities. Therefore, rather than suppressing it, many countries have decided to embrace Bitcoin and fully explore regulations that work.
United States
As states have their own legislative powers, crypto regulations in the US vary from state to state. Despite this, generally speaking, crypto regulations in the US are strict. However, Fed Board Governor Michelle Bowman recently said that the Fed has been collaborating with other agencies to regulate digital assets. She also suggested that she has tried to keep an open mind about the central bank’s digital currency.
Earlier, US Secretary of the Treasury Janet L. Yellen and Estonia Finance Minister Keit Pentus-Rosimannus discussed the details of the new crypto regulation proposed by Estonia over a conference call. After the call, Rosimannus said he suggested to Yellen that Estonia could share its experience to identify best practices with the US and also discussed opportunities for cooperation in implementing FATF standards and regulating crypto assets. Generally speaking, the US does not label cryptocurrencies as illegal.
Russia
In January 2022, the Central Bank of Russia made several proposals for a blanket ban on crypto trading and mining in the country. However, it suddenly reversed the stance on cryptos a few days ago. It is reported that the official website of the Russian government has published documents that will bring cryptocurrencies into the same regulatory framework as foreign currencies. This legislation will come into force in the latter half of 2022 or 2023 at the earliest.
This move means that businesses like crypto mining and trading will be legally licensed in Russia, which is now the third largest Bitcoin mining center in the world. This is an extremely favorable factor for the entire crypto world. Driven by this news, the hashing power of the entire Bitcoin network shot up by 10% that day and peaked at 204.33EH/s, and the BTC price also edged higher.
India
In her budget speech on February 1, 2022, India’s Finance Minister Nirmala Sitharaman announced the country’s plan of crypto regulation, with a 30% income tax on digital assets. Many have misinterpreted the announcement as a signal that cryptos will be legalized in India. Finance Secretary T.V. Somanathan said in a recent interview that the crypto ban remains valid and that taxing cryptos will not necessarily make them regulated. He suggested that all possibilities are open when it comes to cryptos, and the final decision will be made by India’s Prime Minister Narendra Modi. Despite this, Ajay Seth, Secretary of the Department of Economic Affairs, said that regarding cryptos as an asset has become a global consensus.
Although the tightening of state regulations on crypto is an overall trend this year, it might be gloomy news for the market in the short term. Despite this, many crypto companies and investors are optimistic about such state actions because government endorsement will promote crypto transactions and bring a lot more institutional or individual investors into the market. Moreover, the regulations aim to build a secure, steady crypto environment, one that further clarifies the status of cryptos in a country. From a long-term perspective, such regulations are favorable for the entire crypto space.
