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Crypto Will Tangle Will Regulators In 2022, Analysts Say

The new year will see the cryptocurrency market mature further as a genuine asset class, bringing in new investors and asset flows, one analyst says.
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Cryptocurrency saw some wild times during the past year, and analysts believe the market will continue to mature in 2022, with increasing regulation and more investment from traditional sources.

Alex Lemberg, CEO of the Nimbus Platform, said he is extremely bullish about bitcoin in 2022.

“I believe that 2022 will be a very large catalyst for institutional banking and alternative assets, hedge fund space, family office space and private equity space,” he said. “Because they believe that regulation will begin to become more clarified and be better at leading participation in these markets rather than restricting.”

Lemberg added that “a massive influx of institutional capital and sovereign capital, won't have too many options and too many places to flow, so they will certainly flow a good portion of that into bitcoin.”

He also discussed the issue of proof-of-stake, a cryptocurrency consensus mechanism for processing transactions and creating new blocks in a blockchain. 

In contrast, proof of work uses a competitive validation method to confirm transactions and add new blocks to the blockchain.

Lemberg believes the introduction of proof-of-stake may not necessarily alleviate all of the energy drains that mining bitcoin has. 

“But it should make a deep enough dent where I do see countries from Asia becoming more amicable to supporting mining or providing certain, perhaps better, guidelines around mining,” he said.

Nicholas Cawley, strategist at DailyFX, said bitcoin is likely to keep its position as the dominant crypto, although its market dominance may dwindle, especially as ethereum switches over from proof-of-work to proof-of-stake.

"The baseline narrative from 2021, namely regulatory guidance from government agencies, increased adoption, and the ‘will they, won’t they’ allow announce spot, bitcoin and ethereum ETFs, will carry on in 2022 but at a greater speed and intensity,” he said.

Next year will also see the cryptocurrency market mature further as a genuine asset class, bringing in new investors and asset flows, Cawley added.

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“The new year brings new excitement for the cryptocurrency industry, but old favorites might return the spotlight in 2022,” said Zak Killermann, Fintech & crypto expert, with Finder. “Many of the problems plaguing the ethereum network, which arguably led to the rise of many ethereum competitors, may come to an end in 2022 with the ETH2.”

ETH 2.0, also known as ethereum 2.0, or Serenity, in an upgrade that primarily focused on increasing ethereum's capacity for transactions, reduce fees and make the network more sustainable.

Killermann said key issues like speed, gas fees and high energy consumption may meet their match, which “begs the question of how ethereum alternatives can compete with a network that has both a first-to-market advantage and a competitive infrastructure.”

Aside from ethereum, Killermann had other predictions. 

“Litecoin is one of the oldest crypto's that has held a spot in the top 20 for many years, with bullish sentiment surrounding the network as we enter 2022,” he said.

He said that litecoin's acceptance by AMC Entertainment  (AMC) - Get AMC Entertainment Holdings, Inc. Class A Report could also help drive the altcoin up, and time will tell if "the silver to bitcoin's gold" will grow in 2022.

Winston Ma, Managing Partner of CloudTree Ventures and author of "The Digital War – How China’s Tech Power Shapes the Future of AI, Blockchain and Cyberspace,” noted that increased regulatory scrutiny has weighed on the crypto exchanges.

Other crypto service providers also felt the pinch in late 2021, as authorities from China to the U.S. grew concerned about its potential to facilitate money laundering and fraud.

“In the example of Binance, the world’s largest crypto exchange, it had to deal with regulatory actions from Canada, UK, Japan, Cayman Islands, Thailand, just to name a few,” he said.

“Singapore has been viewed as the open and welcoming jurisdiction, yet crypto players that raced to set up in Singapore eventually find it is not that easy to obtain the license to operate digital payment token services under the new scheme launched by the Monetary Authority of Singapore (MAS) earlier in 2021,” he said.

Out of 176 applicants, Ma said, 103 have either been rejected by MAS or have decided to withdraw their pending application, including Binance, which recently announced its exit from the licensing process.

“If not Singapore, where else?” Ma asked. “This is the trillion-dollar question for 2022.”