With cryptocurrencies currently targeted by lots of regulators, many have wondered if regulation is good or bad for cryptocurrencies. However, Senior CEO of SEBA Bank Christian Borel says that if the laws are clear, it can drive crypto adoption.
In an interview with Cointelegraph, the banking executive mentions that institutions are likely to adopt cryptocurrencies following the arrival of clearer regulations. Additionally, the presence of “regulated counterparties” within the banking industry creates a secure and trusted way for institutions and their stakeholders to access the crypto assets sector.
Borel says that he expects “to see a considerable acceleration of engagement and adoption of digital assets by institutions driven by a clearer regulatory environment, as these institutional players will need a regulated counterparty in which to operate safely.”
Borel also noted that digital assets are in line with the interests of institutions in finding new prospects. In this regard, he states that “Institutional investors have always been very attentive to new investment opportunities and their interest in the digital asset sector is consistent with this approach.”
The executive also believes that because the industry meets the needs of many, it will have more digital asset banks in the future. A digital asset bank is very similar to a traditional bank. According to Borel, a digital asset bank offers “a full suite of traditional banking services.” However, these belong to the digital economy, as they have a wide range of crypto-structured products.
“I believe that digital asset banks will become increasingly ubiquitous as the digital economy grows, adapting to the changing needs of customers and prospects in the fast-paced digital asset economy,” Borel asserts.
When asked about the benefits that digital assets can bring to both institutions and individuals, Borel described cryptocurrencies as an “attractive alternative” as the other option is to stick with “low interest rates and a low return of investment”.
2022: the Year of Crypto Regulations
If 2021 was the year of the cryptocurrency boom, 2022 seems to be the year of regulations. The rapid adoption of digital currencies caught the attention of government entities seeking to incorporate legal and tax frameworks. Recently, the own minister of Economy of Argentina, Martín Guzmán ignited the debate in the G-20 proposing a greater control.
After El Salvador defined Bitcoin as legal tender, China was the first country to make a decision regarding the debate. In September last year, China’s central bank declared all cryptocurrencies illegal, banning cryptocurrency transactions and crypto mining. For the Chinese government, unofficial virtual currencies represent a financial, social, and national security risk in addition to contributing to global warming.
Some of the Countries Proposing Crypto Regulations
India will be the first great power to regulate and make cryptocurrencies official. The government of the Asian country has presented, as described by Reuters, its regulation of digital goods and cryptocurrencies with important measures that they intend to start applying in 2023.
The Central Bank of Ecuador announced that it would establish a new regulatory framework for Bitcoin and cryptocurrencies. According to Guillermo Avellán, the manager of the entity, in dialogue with Bloomberg online, digital assets will be the object of regulation in 2022 and there will be limits on their commercialization in Ecuador. For the moment, the only legal tender in that country will be the US dollar and cryptocurrencies will continue to be investment assets.
Both Chile, Brazil, and Uruguay seem to be the least harsh countries against assets. In Argentina, the discussion does not seem to be against crypto assets but rather to implement regulation and taxation mechanisms. At the G20, Martín Guzmán referred to the issue, stating that, “we agree on the importance of developing a framework for gathering information that guarantees full compliance with tax obligations.”
In conclusion, the viability of investing in cryptocurrencies will depend on the risk that the user is willing to assume. Many people invest in them looking for high profits and not with the desire to preserve their assets and generate profitability. When this premise is no longer possible, people will withdraw their resources and there could be major crashes. The volatility with which they develop is one of the great reasons that it is costing the common citizen to adopt them. If we add to this the non-existence of an official issuing entity, which means that many companies in the commercial sector do not accept this means of payment.
By Audy Castaneda
