The Future of Crypto: Stablecoins, Regulation, and Convergence with Traditional Finance
Industry experts predict stablecoins becoming a true digital currency, the impact of clear regulations, and the convergence of crypto and traditional finance.
As we enter a new year, the world of cryptocurrency is poised for significant developments. Industry experts and leading voices in the field have shared their predictions for the coming year, highlighting key trends that will shape the future of crypto. These predictions include the widespread adoption of stablecoins as a true digital currency, the impact of clear regulations on the industry, and the convergence of crypto and traditional finance. Let’s delve into these predictions and explore what lies ahead for the world of crypto in 2024.
Stablecoins make a great leap forward:
Julian Sawyer, CEO of Zodia Custody, predicts that stablecoins will become a true digital currency, going beyond their current role as settlement tools or on- and off-ramps. Sawyer points to two major factors driving this transformation. First, regulatory developments, such as the UK government’s recognition of stablecoins as a viable means of payment and the European Union’s detailed treatment of stablecoins under the Markets in Crypto-Assets (MiCA) law, will instill investor confidence and drive adoption. Second, the increasing adoption of stablecoins by major companies like Visa, Mastercard, and PayPal, as well as the acceptance of stablecoins by various businesses, will further integrate stablecoins into the global payments network.
Clear regulation ushers in a ‘crypto spring’:
Andrew Whitworth, policy director EMEA at Ripple, believes that 2024 will see the culmination of significant milestones in crypto asset regulation. In the UK, regulatory frameworks will be finalized, with consultations and proposals materializing into credible operational frameworks. The Financial Conduct Authority (FCA) will be empowered with new regulatory powers, and digital asset sandboxes will encourage new market entrants. Similarly, the European Union’s MiCA regulations will provide certainty and regulatory provisions for the crypto industry, fostering growth and competitiveness across the Single Market. Whitworth hopes that these regulatory advancements will bring about a new ‘crypto spring’ with increased collaboration between the private and public sectors.
Crypto and traditional finance will fuse (but slowly):
Philippe Bekhazi, founder and CEO of XBTO Global, predicts an accelerated convergence between digital assets and traditional finance in 2024. While the approval of multiple spot Bitcoin exchange-traded funds (ETFs) will galvanize the market, Bekhazi believes that the impact may not be immediate. Instead, he expects a gradual change in mindset as traditional asset allocators start including digital assets in their portfolios. This gradual adoption, coupled with the establishment of regulatory frameworks, will lead to greater institutional adoption of digital assets and the maturation of the crypto industry.
Crypto criminals scale up:
Phil Larratt, Director of Investigations, International at Chainalysis, warns that as blockchain transaction tracing becomes more advanced, illicit actors will become more sophisticated in their tactics. Larratt predicts that traditional organized criminals and financial crime actors will increasingly adopt crypto, necessitating more intensive law enforcement investigations, advanced fraud protection programs, and partnerships between the public and private sectors. While illicit actors may employ privacy coins, bridges, mixers, and other obfuscation tools, advancements in tracing technology will continue to counter these activities.
The buildout of blockchain infrastructure accelerates:
Samantha Yap, Founder and CEO of YAP Global, highlights the recovery of the crypto industry and the growing focus on the future of blockchain. Yap notes the emergence of technology innovations such as zero-knowledge rollups, modular blockchains, and more scalable layer 2 networks and ecosystems. As the industry shifts its attention to building and decentralization, Yap predicts an acceleration in the buildout of blockchain infrastructure.
Institutional investors re-commit to crypto:
HB Lim, Managing Director of APAC at BitGo, believes that the likely approval of Bitcoin ETFs in the USA will signal a strong institutional commitment to the crypto industry. Lim predicts that as traditional financial institutions enter the crypto space, they will operate under increasingly stringent regulatory frameworks, resembling traditional financial institutions in terms of risk management and compliance. This institutional re-commitment, accompanied by regulatory clarity, will accelerate the tokenization of real-world assets and the expansion of regulated on-chain assets and DeFi services.
Real-world asset tokenization throttles up:
Sam Seo, CEO of Klaytn, expects an injection of liquidity to accelerate the tokenization of real-world assets (RWAs). This will lead to the formation of a stable asset class on-chain, alongside stablecoins, and the of leveraged products linked to decentralized finance (DeFi). Seo also highlights the growing interest among institutions in RWA tokenization, which will contribute to the expansion of tokenized assets. With increasing regulatory clarity, the importance of intrinsic value assets will rise, leading to the growth of regulated on-chain assets and DeFi services that provide investor protection and comply with anti-money laundering requirements.
Falling interest rates and regulatory clarity spur confidence in web3:
Yat Siu, Chairman of Animoca Brands, anticipates a more stable interest rate environment and emerging regulatory clarity, particularly in Asia. Siu expects increased investment in blockchain gaming and the open metaverse due to growing user awareness of digital ownership and the advantages of decentralization. Siu predicts that web3 gaming will thrive in 2024, especially in Asia, the Middle East, and Europe, attracting significant investment.
AI increases the use of blockchain networks:
Renz Chong, Founder of BreederDAO, foresees an increasing use of blockchain to address concerns in the field of artificial intelligence (AI). Chong believes that decentralization will provide access to larger compute power and more sources of data, leading to more robust AI results. Blockchain will also track the sources of data used in AI models, enabling the creation of specialized language learning models while maintaining data privacy. Chong emphasizes the importance of zero-knowledge proofs and similar technologies in verifying the legitimacy of AI models without disclosing sensitive data.
Conclusion:
The predictions for the future of crypto in 2024 paint a picture of stability, convergence, and growth. Stablecoins are expected to become a true digital currency, driven by regulatory recognition and widespread adoption. Clear regulations will bring about a ‘crypto spring,’ fostering collaboration and growth in the industry. The convergence of crypto and traditional finance will gradually take place, leading to increased institutional adoption. As the industry matures, the buildout of blockchain infrastructure will accelerate, enabling the tokenization of real-world assets and the expansion of regulated on-chain assets and DeFi services. Falling interest rates and regulatory clarity will boost confidence in web3, particularly in blockchain gaming and the open metaverse. Additionally, the use of blockchain in AI will address concerns and enhance the capabilities of AI models. With these developments on the horizon, the future of crypto appears promising and poised for further innovation and adoption.