As the Federal Reserve ponders over inflation, the White House is looking to release its strategy over how to best regulate the cryptocurrency markets.
The National Security Council will be delving deep into the market, looking specifically at risks and potential opportunities that cryptocurrencies can bring. The news comes amid the crypto markets experiencing heavy sell-offs with leading currencies bitcoin and ether falling well below their previous highs.
Despite this, however, there is optimism that regulatory measures will be skewed towards the positive. A Coinbase Institutional report touches upon what the regulatory landscape looks like for the crypto markets in 2022 and beyond after such a bullish 2021.
“For 2022 to build on the momentum of this past year, it is imperative that regulators approach crypto with balanced engagement, appropriately weighing burdensome oversight with valuable clarity,” the Coinbase report says. “We can all ensure this balance is maintained by remaining aware of developments and continuing to engage legislators and regulators through direct outreach and comment letters. At Coinbase we will try to make this easier through insight pieces, as well as by advocating for the industry publicly and privately.”
Moving in the Right Direction
The crypto markets have often been viewed as sort of a Wild West when it comes to regulation, particularly with regard to the exchanges where they were prone to hacking. That said, as the crypto markets continue to mature, regulatory measures should be a step forward in the right direction to help bring even more legitimacy to the markets and thus, wider adoption.
The Coinbase report brings to mind the power of the crypto markets when it comes to federal regulation with respect to the recently passed infrastructure bill. Similar to the Reddit forums taking on Wall Street, a galvanized crypto community almost upended the bill.
“Reflecting on the crypto regulatory landscape at the beginning of 2021 and where it is now, it has clearly moved in a positive direction,” the report says. “In late December 2020, there was a push to impose burdensome self-hosted wallet reporting regulations that were to be implemented in early January.”
“This followed a similar experience in September 2021, when an overly broad definition of ‘broker’ for digital assets was included in the Congressional infrastructure bill,” the report notes. “This spurred the crypto community into action, creating a standoff that almost derailed the Infrastructure bill, an important piece of legislation. The definition ultimately remained, but the community was galvanized.”
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