GB Market Commentary 18/01/2022
by Marcus Sotiriou
Bitcoin has retreated to below $42,000 again, as governments take further action to regulate the asset. For example, Singapore have restricted crypto ads as the Monetary Authority of Singapore (MAS), the country’s central bank, claim that crypto trading is not suitable for the public. In Singapore, around 170 companies have applied for licenses to provide crypto services, yet more than 100 of them have either withdrawn their application or been turned down.
In addition, India’s prime minister calls for governments worldwide to collaborate on crypto - similarly to U.S. President Joe Biden’s urge in November for countries to collaborate on Bitcoin and Cryptocurrency, to ensure that they do not fall into the wrong hands. However, the Reserve Bank of India (RBI), has called on the Indian government to completely ban cryptocurrency. We will see in due course what action Indian Prime Minister Modi will take on the regulatory framework for crypto that has been worked on for quite some time.
Furthermore, the State Bank of Pakistan have recommended that cryptocurrencies be declared illegal and banned completely. A day later, major bank in Pakistan has asked customers to avoid participating in crypto transactions through SMS alerts. It was reported last week that multiple banks have blocked their customers’ credit card transactions suspected of involving cryptocurrency.
I think these actions from Pakistan, Singapore and India will only shift economic value to other countries who are more accepting of this revolution, like El Salvador.
Despite these strict regulations, business advisory firm Gartner expects criminal crypto transactions to fall by 30% by 2024. This is due to the blockchain’s transparency as well as fraud prevention tools which are currently being used only by blockchain intelligence firms. The lack of criminal activity in the crypto market shows that some of these proposed regulations are irrational.
The rise in scrutinization of crypto usage by global regulators worldwide may have contributed to a spike in value for privacy coins, whop have rallied considerably recently - tokens SCRT and DUSK both rallied by around 50% over the past week. I think privacy-related cryptocurrencies will be a trend in the coming years and will outperform the market at some point, as they could be a way to bypass strict regulations, due to the flow of money across their networks being obscured.