With only two months left in 2020, the year has been a roller coaster ride for cryptocurrencies. The Chinese New Year in the first quarter saw significant drop and jump in crypto prices, followed by COVID-19 scare and the eventual rise as people realized it was easier to use cryptos than fiat while isolated.
As the year crawls towards its end, crypto traders and enthusiasts look towards 2021 and what it will bring. Here is our predictions on cryptocurrency adoption that can significantly impact their market value:
EU has proposed a legislation in September that seeks to classify cryptocurrencies as financial instruments. The Regulation on Markets in Crypto Assets (MiCA) bill define rules that will define what crypto assets are, including different categories such as utility, securities etc. If passed, the bill will be applicable across all 27 member countries. With clarity on their businesses, blockchain companies will finally be able to work under legal coverage. At the same time, token holders will also be happy to have a single law to protect their rights.
This will eventually boost adoption of cryptocurrencies by sceptics, driving up the market.
Indian Crypto Regulatory Sandbox
Though not as large as the EU market, India is a significant one in itself. With the ban on cryptos finally overturned by their highest court, declaring the rule unconstitutional. With the confusion cleared in the start of 2021, the country still has a vacuum in terms of regulations. The crypto community has stepped in to create a regulatory sandbox in the absence of any state regulation.
The sandbox framework is being designed to use existing legislations, bringing cryptos and blockchain under a single umbrella. The sandbox also proposes to setup supervision for start-ups and cater for AML/KYC checks. The sandbox will pave for a regulated and controlled crypto industry in India, bringing in confidence to both developers and crypto users.
Hopping across to the New World, the Trump’s Administration’s COVID-19 Relief Package has seen a whopping $1.1 trillion being allocated to the public and industry for their survival. The money is being injected into the US economy without any asset banking. In other terms, it’s being created out of thin air!
A nemesis of fiat, one of the founding principles of cryptocurrencies is its deflationary nature. As more and more Dollars are injected by the government, its value will fall, driving up trust in cryptos and their adoption.
2021 will be a very interesting time for cryptos. The adoption will be at an all-time high, with distrust in fiat increasing as the world’s economy grinds down. Though the future is not set and no one can know for sure, the trends are pointing towards a bright crypto future.