To say that 2022 has been a bad year for cryptocurrencies and blockchain would be an understatement. There was optimism that blockchain-related companies would gain traction with the public earlier in the year, but it proved to be a difficult one, filled with events that greatly damaged the sector’s reputation.
It was like investors, and market watchers have been on a roller-coaster ride in 2022, experiencing intense momentum, big valuation dips and shocking fraudulent incidents that brought down big names in the industry. However, as the new year rolls around, optimism can still be felt for blockchain. That optimism, according to a blockchain forecast should come with more stringent regulations and sturdier oversight on industry players.
Due to the cryptocurrency and blockchain space being permeated with exit scams and hacks, questionable and unregulated exchanges and platforms will likely be looked into and shut down this year. An overheating global economy that cannot afford trillions of dollars of losses incurred last year due to crypto-related firms collapsing will bring forth a combination of tighter regulatory oversight and stricter regulations on the digital sector.
This is hardly surprising given the dozens of bills, acts and laws that have already been proposed, debated and discussed in both houses of the United States Congress, not to mention the efforts and pronouncements that have been put forward from the White House and the Securities and Exchange Commission.
The government, its lawmakers, regulators and law enforcement agents are under great pressure to create and execute stricter regulations after 2022’s extreme crypto value volatility and the spectacular collapse of several organizations. The situation only worsened when investigation found political ties linked to the FTX collapse.
Last December, Oregon democrat and Chairman of the Senate Finance Committee Ron Wyden wrote to cryptocurrency exchanges Binance, Coinbase, and others, requesting information on their organizational structures, financial sheets and real estate acquisitions, in an attempt to ensure the protection needed for customers of exchanges.
The essential issue that must be discussed and understood as regulatory dialogues progress is the need for regulators to be viewed as taking action to remedy market failures, without unintentionally stifling blockchain innovation in the process.
Blockchain education plays a crucial role in this process—the basic one being for policymakers to learn the difference between crypto and blockchain. More clarifications from regulatory bodies will also be expected as the applicability of current security laws and property rights remains in question when it comes to digital assets.
As both national and corporate economic development are often considered as being dependent on technological and innovative advancements, lawmakers and regulators are soon expected to be well-versed on the accessibility of reliable data about blockchain technology, the proof-of-work scalability and sustainability and the risk of conflating cryptocurrencies.
Whatever the intricacies of an industry may be, greater openness, reportability, comparability, and the ability of investors and regulators to pick out bad actors are all benefits of effective regulation. Opportunities to create a better, more sustainable and more transparent market arise from every industry dilemma, and it appears that this will be the case for crypto in 2023 as well.