With the pandemic continuing to take its toll on the global economy, a lot of uncertainties remain. However, a prediction that has increasingly been acknowledged is that crypto mass adoption could be right around the corner. One of the main barriers facing the adoption and integration of blockchain technology has been governments’ reluctance to establish solid regulations for crypto, due to widespread and often misguided fears surrounding cryptocurrencies. However, growing public interest in digital currencies is putting pressure on governments to provide effective regulations, and recent research carried out by Wirex and the Stellar Development Foundation (SDF) suggests that 2021 could be the year this all changes.
How many people own crypto?
Once considered an exclusive medium for tech-savvy investors, crypto is already hugely popular, with Statista suggesting that there were 63 million crypto wallet holders globally at the end of 2020; almost the same population as Thailand. Interestingly, Wirex and SDF’s research shows that these users are spread across all demographics; 42% of respondents were 45 or older, and 70% of females said that they owned crypto.
According to Findexable’s 2020 report, by 2022, 60% of global GDP will be digitized, meaning digitized payments will move from a niche interest to a global mainstream one. Advantages including low costs, fast speeds and more transparency make it an attractive alternative to traditional payments (see Wirex’s research suggesting that 40% of people think that 1% transaction fees for international payments is too high).
As both B2B and B2C payments become digitized, the market will open up to more opportunities for innovation to larger pools of consumers. Leading payments platforms such as Wirex are already taking advantage of this using state-of-the-art technology to allow customers to buy, hold, exchange and spend multiple traditional and crypto at 61 million locations around the world.
The global pandemic has only accelerated the growing trend of making payments online, meaning more and more people are beginning to realize the benefits of a token-based economy. In a recent survey, 74% of respondents believed that cryptocurrency is a viable alternative to the traditional monetary systems, and with increased mainstream media coverage about the benefits of cryptocurrency, this interest is likely to grow amongst the general population.
Expanding regulations in the Middle and Far East
Governments are increasingly recognizing the benefits that crypto can offer their economy, and it could be argued that the Asia-Pacific region is leading the race. With East Asia accounting for 31% of all cryptocurrency transacted in 2020, it’s hardly surprising their need to establish these regulations. Singapore has positioned itself as a global crypto leader, becoming one of the first countries attempting to create a legal framework in the form of the Payment Services Act, to give both consumers and businesses the confidence to operate safely in the space. Government actions such as this are establishing trust amongst crypto users in an arena that was typically associated with scams and losses, and Wirex’s report shows that 86% felt safe using crypto.
Following in Singapore’s footsteps, the Middle East may not be far behind when it comes to regulating crypto. CoinTelegraph reported that the Dubai Financial Services Authority (DFSA) has been looking to enhance local crypto-currency related regulations, where, according to the DFSA, the upcoming crypto framework will “further expand the regulation of digital asset issuers and associated trading platforms.” The framework is set to include several digital assets and cryptocurrencies like Bitcoin and will also focus on multiple anti-money laundering measures.
How the West is catching up
While Western governments’ attitudes have often been more sceptical of mass crypto integration, the future looks bright with the election of Joe Biden as US president. Within days of starting his new role, he picked pro-crypto academic Gary Gensler to head up the Securities & Exchange Commision. Not only has Gensler acknowledged crypto as key to maintaining the US’s status as a world power, but he has also suggested the technology is a “change catalyst.” This could mean that more structured crypto regulations are on the cards for the US in 2021; a diversion from Trump’s attitude toward the currency.
The UK may also be looking to set out frameworks for crypto assets, though it seems to be taking a slightly different approach by placing the focus on stablecoins. A statement from the chancellor, Rishi Sanuk, suggests he may have a more favorable attitude to crypto assets, noting that “stablecoins could transform the way people store and exchange their money, making payments cheaper and faster.” However, despite the opportunities that stablecoins present by being less volatile than conventional cryptocurrencies given their pegging to a stable asset, research showed that only 25% of people had heard of them, suggesting there’s a long way to go for their mainstream adoption.
Nevertheless, with growing institutional acceptance and trust established amongst users, this will only support the development of a digital economy.
What can we expect by the end of the year?
The future for crypto looks promising given that it’s no longer considered a niche interest. Both bitcoin and Ethereum have recently reached all-time highs, whilst Google searches for Ethereum have also soared, and it’s clear that the discourse around major cryptocurrencies has crossed into the mainstream media. Yves Renno, a trading analyst from Wirex has suggested that “much of this is down to a growing interest in DeFi, and with technological upgrades coming to the Ethereum network in the coming months, Ethereum in particular looks to have a promising future.”
As digital currencies continue to grow in popularity, governments may need to act quickly to set out regulatory frameworks. Only then will they want to take full advantage of the efficiency of the digital economy and the multitude of benefits it could bring for people in their day to day lives.
Kat Lacey is a PR and communications specialist at Wirex.