This article is written by one of our contributor Natalia Goretski
There is so much content living on the internet with crypto predictions with short and long term focus, you can easily get lost. The dramatic rise of cryptocurrencies over the past few years has caught the financial sector by surprise. The number ofcryptocurrency exchanges is now far greater than the traditional exchanges.
Most countries have made some kind of statement on the legality of cryptocurrency and have been scrambling to develop laws and guidelines regulating the use of bitcoin and other digital currencies.
Let’s take a close look at the current regulation landscape.
Asian markets were some of the earliest and most enthusiastic cryptocurrency adopters, but government responses vary.
China is clamping down on the sector, having banned ICOs in 2017 and shut down domestic cryptocurrency exchanges.
The culture of Japan is particularly amenable to cryptocurrency, with high numbers of users playing video games using virtual currencies. 88% of Japanese citizens have heard of bitcoin. Digital currency exchanges, however, are tightly regulated as the government is known for their thorough but forward-thinking regulations.
South Korea was initially known for its favourable legislation. However, authorities have made moves to throw cold water on the market in recent times, with some new regulations in the works.
Several countries across the Middle East have banned cryptocurrency, including Saudi Arabia, Qatar, Egypt, Bahrain and Iraq.
In the European Union (EU) cryptocurrencies are legal but member states are not allowed to introduce their own digital currencies.
Germany, Europe’s largest economy joined the hype over cryptocurrencies a while ago. In addition to FinTech, there is a huge interest to blockchain and crypto from a wide range of industries, including the energy sector, pharmaceutical companies, and the auto industry.
Porsche in partnership with Xain see the future of cars as a part of the blockchain making a direct offline connection possible without diversion through a server.
Canada, the USA and Australia responded quickly and moved to work cryptocurrencies into existing financial systems. However, the three countries have adopted quite separate approaches to how they regulate digital coins and tokens.
There are various approaches in South America ranging from outright bans to openly embracing cryptocurrencies.
BLOCKCHAIN HUBS GAINING MOMENTUM
Blockchain is proliferating across the globe and many countries are now claiming to be “blockchain hubs”. What is meant by this is the country intends to put an infrastructure in place which could potentially attract blockchain companies at a later date. But there are definitely certain regions that are far ahead of the curve in terms of distributed ledger technology (DLT) and its wider integration into society.
Malta is fast becoming the blockchain capital of the world. It recently passed three comprehensive bills on all aspects of DLT, making it the world’s most advanced blockchain jurisdiction from a legal perspective.
Potential blockchain hubs which do not quite make the elite 3 include Switzerland, Singapore, Liechtenstein, and South Korea. Cryptocurrency is popular in South Korea with many exchanges located there and a high trade volume.
By contrast, a country such as Estonia, Lithuania, Latvia or Malta can get things done quicker, there being less vested interests and red tape. Smaller countries are also easier for testing models. Favourable tax rates and legal frameworks are the additional benefits that turn blockchain hubs into incorporation hubs for entrepreneurs.
2017 – 2019: the era of crypto acronyms
The crypto investment market has also turned into a flexible financial arena with digital investments strategies and instruments undergoing significant changes and transformation.
ICOs started building steam in 2016, really took off a year after, and suffered a PR nightmare in 2018. Later on the crypto community switched over to STO (Security Token Offering).
Security tokens in STO unlike the utility tokens in ICO offer a number of financial instruments, such as a share of a company, a monthly dividend, a voice in the business process. In other words, STO business model grants a set of right and obligations and protects investors by existing legislation and case law and attracts institutional money.
The latest approach – the IEO (Initial Exchange Offering) is another step up which allows exchanges to supervise and launch new blockchain projects independently. The project does not sell tokens to the investors. The exchange being in fact a counterpart then sells the tokens to contributors. Meanwhile, the requirements to tokenized projects have sensibly tightened. Since the Whitepaper-only approach has become a thing of the past, MVP (Minimum Viable Product) is now a reasonable supplement to the selection criteria.
Corporate money waiting at the door
Blockchain originally invented to serve as the public transaction ledger of bitcoin is rapidly entering the real economy sectors and turns into one of the indicators of bitcoin price levels.
We are at that point when institutional money is waiting to enter the crypto space and push it to new highs. In combination with the new wave of Blockchain and crypto adoption, the new crypto bull market is likely to be driven by institutional money.
More and more big names start developing blockchain solutions and test their applications. The number of examples of blockchain integration into the real business is growing every day. Here’s just a few success stories:
Everledger tracks gems, metals and minerals from the point they are taken out of the earth to their sale to guarantee authenticity, existence and ownership. The company captures a stone’s 3D digital fingerprint and then lists the quality of the stone and its cut on the Blockchain enabling retailers to guarantee consumers that they are buying ethically-sourced stones. The company started out with diamonds in 2015 but now lists other precious stones, minerals, metals, fine wine and art.
BDO, the major accounting and auditing firm, has partnered with Decentralised Capital to offer comprehensive audit and assurance services for blockchain companies and assets such as cryptocurrencies, security tokens, stablecoins, trading platforms and Initial Coin Offerings. This crucial step opens up the sector to institutional investors and creates credibility for the blockchain industry.
AgriDigital, the world’s first cloud-based, commodity management platform develops blockchain-based solutions for grain industry and builds secure and trusted agri-supply chains. The team undertake world-leading pilots in food traceability and supply chain provenance, real-time payments, digital escrows and supply chain finance.
Power Ledger is creating new markets for energy from renewable sources and enabling peer-to-peer electricity trading from rooftop solar panels. The company empowers households to trade their excess rooftop solar power with their neighbours. The technology can also be used to trade carbon and renewable energy credits.
TravelbyBit, an online travel booking platform built for the blockchain generation enables users to spend their digital currency for travel, retail, dining and entertaining.
ScalaMed team have created a convenient and easy to use digital wallet for prescriptions. They use blockchain to ensure patient’s health data is kept safe and private. The app can be plugged into existing medical records resulting in minimal integration overhead and business disruption.
Blockchain-powered platform TradeLens, built by IBM and Maersk has now more than 100 participants and is processing thousands of documents each week. The new additions are MSC, the second largest after Maersk, and CMA-CGM, the fourth largest in terms of cargo carrying capacity.
Data is obviously the new oil and companies that effectively capture and capitalize on that data facilitate innovation and unlock new value. It is evident that blockchain is about much more than cryptocurrencies and payment services. The technology unquestionably opens door for a wide range of uses and will likely reach an enterprise production level in the next few years.