What’s ahead for crypto and blockchain in 2022? Experts Answer, Part 3

Alex is a writer, speaker, investor and adviser focused on the impact of emerging technologies such as blockchain and cryptocurrencies. He is the general manager of Ninepoint Digital Assets Group, an investment management services provider in the field of blockchain technology and cryptocurrency. 

“I think 2022 is the year of multichain. 2021 saw the rise of new layer-one protocols like Solana and Avalanche that promised to improve on Ethereum with faster throughputs and lower fees. But these benefits may prove impermanent. As they become more popular, they may suffer the same fate as Ethereum. Remember, Ethereum fees used to be cheap too until the network found a product-market fit with the rise of liquidity mining and other DeFi applications. 

With a tsunami of new users coming into the ecosystem, it became a victim of its own success. Fees skyrocketed, turning Ethereum into a ‘whalechain,’ meaning only the wealthy could afford the fees. The same thing could happen to other layer ones. That’s OK. I believe the scarcest resource in the world for the next few years will be block space. All these layer ones will probably fill up, meaning we need better ways to interconnect different protocols. 

Most new crypto users will only interact at the application layer, not knowing or caring what base chain they run on. That means making interoperability a reality. A few groups are working on multichain, including Cosmos, which supports hundreds of crypto assets worth tens of billions of dollars. 2022 is the year of Multichain Maximalism, and Cosmos is leading the way.”


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What’s ahead for crypto and blockchain in 2022? Experts Answer, Part 2

Alan is the chief legal officer at PrimeBlock, a sustainable Bitcoin mining operation, infrastructure solutions provider and member of the Bitcoin Mining Council, with locations spread across North America.

“We’re going to see more countries adopting crypto as a legal currency. We’re also going to see central governments coming out and taking their own currencies and putting them on a blockchain. China has already said it is going to do this, which will speed up the real competition for private cryptocurrencies from a payment perspective. 

Central bank digital currencies do not present competition from a store of value or inflation protection perspective because it’s still the same fiat currency, subject to the same monetary policy manipulation by central banks. It’s certainly something that is fully digital, transparent, and has both good things and some very scary things that come with it. The hope is that, at least in the United States, the dialogues around CBDCs will happen alongside maintaining the values of our society in mind, including our own privacy and control.

How China versus the U.S. will run it will differ, so the dialogue needs to consciously ask the right questions. There’s a way to get carried away with technology that really ignores the fundamental, social, political, philosophical and legal impacts it could have on society. It’s an immensely powerful tool — I’m not understating or overstating it. The government has a lot of regulatory control of the payment, banking and monetary systems now by regulating important intermediaries like banks and other entities. This is going to be directly impacting us on a micro level.”


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What’s ahead for crypto and blockchain in 2022? Experts answer, Part 1

Sandra is CEO of the Global Blockchain Business Council, an industry association for the blockchain technology ecosystem.

“​​In 2022, it will be ‘corporate career risk’ to not have a baseline understanding of cryptocurrencies and blockchain technology. From bankers to corporate executives to politicians, it is imperative that they get on board and seriously consider the implications of blockchain.

Further, 2022 winners will ‘expect the unexpected,’ and adapt to investing, servicing clients and participating in new trends.

In 2021, few expected NFTs to become the killer app, driving mainstream interest and adoption. Web3, the Metaverse and DAOs will enter mainstream curiosity in 2022.

The boring infrastructure stuff is critical. Crypto markets and the blockchain industry are experiencing explosive growth, but to scale, they need common terminology, standards and sound governance, including conflict resolution. 

The Global Blockchain Business Council will continue the Global Standards Mapping Initiative in 2022, mapping the regulatory, technical, academia and business states of cryptocurrencies and digital assets.

GSMI is the largest crowd-sourced, open-access crypto and blockchain research project. GSMI 2.0 content, released in November, was the result of eight months’ work from over 200 individuals and 131 institutions, including student researchers and veterans of government, industry, start-ups and regulation.

For 2022, I remain mindful to stick to the original vision of leveling the playing field for many, not a few.”

These quotes have been edited and condensed.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.


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Ex-CFTC Officer Becomes Partner At a16z Crypto

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Brian Quintenz, a former CFTC commissioner has joined the crypto investment team at Andreessen Horowitz (a16z) as an advisory partner.

A16z Crypto Hires New Advisor

Andreessen Horowitz (a16z) has announced a new advisory partner for its crypto investment team–Brian Quintenz, a former Commissioner for the Commodity Futures Trading Commission (CFTC).

The CFTC is one of the leading financial regulators in the U.S., and is responsible for regulating non-security commodities and derivatives. 

According to a16z, the latest hiring is part of a larger effort to ensure the company has support in place for policy and regulatory matters.

In recent years, a16z, which is considered as one of the most influential venture firms in the world, has made several investments in the cryptocurrency and decentralized finance (DeFi) space. In June of this year, it announced a new $2.2 billion crypto fund. 

Bringing onboard a former CFTC commissioner will allow a16z to better navigate the emerging regulatory challenges in U.S. crypto scene.

During his CFTC term from 2017 to 2020, Quintenz oversaw the first fully-regulated Bitcoin and Ethereum derivative contracts in the U.S. He also led CFTC’s Technology Advisory Committee and deliberated on various crypto policy discussions. 

Commenting on Quintenz’s appointment as an advisory partner, the a16z team noted:

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“He understands both how crypto technology works and how the CFTC thinks about the issue. His ability to translate between the two will be central to the success of a16z’s Crypto policy program and our portfolio companies.”

The hiring comes at a time when U.S. financial regulators are considering regulating the fast-growing cryptocurrency sector. 

Just last week, it was reported that the SEC is investigating the decentralized exchange Uniswap, which is one of a16z’s notable investments. The firm has also invested in Solana, a network that hosts various decentralized derivatives trading protocols.

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Singapore central bank shortlists 15 companies to develop retail CBDC

The Monetary Authority of Singapore (MAS) has shortlisted 15 “Global CBDC Challenge” participants to help build an in-house retail central bank digital currency (CBDC).

An announcement shared by the MAS shows that the finalists include six companies from Singapore, four from the United States, and one each from Australia, Barbados, Germany, France and Switzerland, out of which only three winners will be selected for deploying a retail CBDC in Singapore.

Soon after the Singaporean central bank announced cash prizes for digital currency ideas back on Jun. 28, the challenge reportedly saw the participation of over 300 fintech companies spread across more than 50 countries.

The global finalists include ANZ Banking Group Limited (Australia), Bitt (Barbados), Giesecke+Devrient advance52 GmbH (Germany), Criteo (France) and Soramitsu (Switzerland).

From the home ground, shortlisted Singaporean consortiums include Citibank N.A., HSBC Bank Limited and HSBC Holdings plc, IDEMIA, IOG Singapore Pte Ltd., Standard Chartered Bank and Xfers Pte. Ltd.

The United States-based companies are cLabs, Inc., Consensys, Extolabs LLC and IBM.

This initiative to build a retail CBDC for Singapore will be complemented with a cash prize of 50,000 Singapore dollars ($37,000). As discussed in an older announcement, the 15 finalists will be mentored by the MAS and “be given access to the APIX Digital Currency Sandbox for rapid prototyping of digital currency solutions.”

The sandbox environment will include more than 100 APIs related to core banking and payments, and will also have digital currency APIs from Mastercard. The finalists will now have the opportunity to pitch their CBDC solutions at Singapore FinTech Festival, which is planned for Nov. 8 to Nov. 12, 2021.

Related: Singapore grants first regulatory in-principle approval to crypto exchange

The Singaporean authorities have been making pro-crypto moves throughout 2021. The MAS recently gave an “in-principle approval” to the Australian crypto exchange Independent Reserve, allowing the firm to “operate as a regulated provider for Digital Payment Token (‘DPT’) Services.”

Singapore reportedly hosts a long list of 170 crypto exchange applicants, including Binance and Gemini, waiting to seek approval for conducting business within its jurisdictions.


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Stablecoin adoption and the future of financial inclusion

Institutional interest in crypto is growing, confirmed by a Goldman Sachs survey, which found that 40% of the company’s high-net-worth clients were already exposed to cryptocurrencies. Stablecoins — which offer a more secure and steady option in the crypto space — have experienced hyper-growth, reaching a $119 billion market cap. The volatility of crypto has attracted more conservative investors to asset-backed stablecoins.

Stablecoins are a form of private money. As Christina Segal-Knowles, executive director for financial markets infrastructure at the Bank of England, points out, modern money is a combination of public and private funds, up to 95% of which in developed economies is private. She adds:

“If new forms of digital money can be made safe, they could potentially contribute to faster, cheaper and more efficient payments with greater functionality. They could increase the resilience of payments. And they could even have long-term benefits for financial stability.”

True stablecoins, which are non-interest-bearing coins designed to have a firm value against a reference currency or asset, have an important role in the future of global finance. They offer low-cost, safe, real-time payments. Doing so makes it cheaper to accept payments and easier for governments to run conditional cash transfer programs while lowering the cost of remittances and connecting the unbanked to the financial system.

Related: What form of digital assets will be the future of payments?

We grew up with the gold standard; creating new financial instruments backed by gold and other real-world assets that protect value and allow people to borrow against their assets makes sense. The global monetary system as we know it is not that old — it’s only been 75 years since Bretton Woods.

Only 50 years ago, however, President Richard Nixon announced that the U.S. dollar would no longer be backed by gold as it had been since Bretton Woods. Now that system is under threat, not only from governments printing money as if there is no tomorrow and the resurgence of inflation but also from stablecoins.

Related: Stablecoins present new dilemmas for regulators as mass adoption looms

In particular, Facebook’s announcement of the Libra project in 2019 made regulators sit up with its potential to become global and access billions of users through its social network platform. China is exploring cross-border payments in its digital yuan development, which could extend to the more than 50 lower middle income countries part of the Belt and Road Initiative. These countries are home to the majority of the world’s population. The rollout of the digital yuan could potentially unseat the U.S. dollar as the backbone of the global financial system.

Stablecoins and emerging economies

On the other hand, the potential positive value of stablecoins is in emerging economies and for populations under threat. Think of people watching the value of their hard-earned savings erode or citizens of countries like Venezuela and Lebanon watching their currencies nosedive. Think of how the global COVID-19 pandemic has exposed the urgent need for low-cost, direct digital transfers.

In a recent paper, Katherine Foster and other researchers highlighted that stablecoins carry the potential to facilitate secure and convenient transactions without volatility at a lower cost than mobile money held in a wide variety of non-bank wallets. That positive value is badly needed as global remittances, a critical development finance flow, have fallen during the pandemic due to job losses for migrant workers. Remittances saw their most serious decline in recent history, falling by almost 20% from $554 billion in 2019 to around $445 billion in 2020.

The humanitarian community also sees the potential and has pushed the boundaries on blockchain technology to improve the effectiveness and efficiency of its interventions. Ric Shreves, director of emerging technology at Mercy Corps, sees stablecoins as a compelling use case: “Imagine if we had a low volatility low-cost coin that was acceptable globally. How could that impact our work? It could impact our work from everything, from back-office operations, us moving money into difficult places, to actually doing direct distributions, to our program participants, there’s a number of really compelling use cases for that technology.”

Related: Digitizing charity: We can do better at doing good

Developing countries are already embracing crypto. The 10 top countries with cryptocurrency users globally include Kenya, Nigeria, South Africa, Venezuela, Colombia and Vietnam. The latest crypto report from Finder, a financial product comparison website, also reports that emerging economies like Vietnam, India and Indonesia are leading in the crypto adoption race. The trend of consumers from emerging markets in Latin America, Africa and East Asia turning to crypto may preserve savings they may otherwise lose to economic turbulence.

Stablecoins and the new financial order

Building a new decentralized financial system with stablecoins will fundamentally change how people save and use their assets and money. Here are some of the reasons why:

  • Stablecoins have the potential to overcome significant shortcomings and friction in existing cross-border payments, which is vital for remittances and reducing the cost of remittances.
  • Stablecoins can promote welfare as countries recover from the catastrophic consequences of the global pandemic with money distributions, like the stimulus packages currently being distributed to the millions of unemployed during the COVID-19 outbreak.
  • Stablecoins can positively impact financial inclusion — using electronic money for payments and savings will allow people to build digital histories, which are essential for access to credit.
  • Stablecoins can extend cross-border trading opportunities for small and micro businesses.
  • Commercially issued stablecoins could present an alternative for the unbanked and provide greater stability by giving them access to a store of value, enabling them to save without overcoming high barriers to entry for banking services.

Related: The way of the stablecoin: A journey toward stability, trust and decentralization

“We’re going to have more humanitarian crises, sadly, as a result of COVID-19,” said Sofie Blakstad, founder and CEO of hiveonline. “And we’re also going to have less money. So now is the moment to really use tech to prove how we can deliver these goals more cheaply.”

Stablecoins and challenges

There are hurdles to achieve this. Despite their name, stablecoins do not guarantee stability. There is a lack of uniform standardized taxonomy for stablecoins. The United States Federal Reserve has called for a comprehensive regulatory framework for stablecoins. Moreover, any solution would need to address consumer protection, financial stability and financial crime prevention. Furthermore, there will be regulatory challenges across diverse economies, jurisdictions, legal systems and different levels of economic development. These challenges would require harmonizing legal and regulatory frameworks governing data use and sharing, competition policy, consumer protection and digital identity.

F. Christopher Calabia, a former senior vice president and banking supervisor at the Federal Reserve Bank of New York, raised five critical questions on the potential of stablecoins for the poor in his paper “Could the Poor Bank on Stablecoins?” These important questions were: Will stablecoin processing speeds be fast enough for the poor? Will technology available to the poor support stablecoins? What will stablecoins cost the poor? How will stablecoin issuers comply with e-money regulations? How will financial systems with limited foreign exchange reserves adapt to stablecoins?

We need the innovators to understand the financial needs of the poor and develop valuable tools for them. At the same time, we need the regulators to reconsider who may provide services and how. Today, we are in an exciting and experimental era of “reinventing money,” how we use it and how people earn it.

With the proper regulation, a stablecoin could be made safe for wide-scale use and fulfill its promise by enabling more funds to reach those in greatest need. For stablecoins to be useful to the poor, they will need widespread adoption by consumers, merchants, businesses and governments. With intentionality, purpose and a nuanced understanding of the needs of the poor, the blockchain community has the technology and the spirit to do this.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Jane Thomason is a thought leader on Blockchain for Social Impact. She holds a Ph.D. from the University of Queensland. She has had multiple roles with the British Blockchain & Frontier Technology Association, Kerala Blockchain Association, Africa Blockchain Centre of Excellence, UCL Centre for Blockchain Technology, Frontiers in Blockchain, and Fintech Diversity Radar. She has written multiple books and articles on Blockchain. She has been featured in Top 100 Women in Crypto, Top 10 Digital Frontier Women, Top 100 Fintech Influencers for SDGs, and Top 50 Global Thought Leaders and Influencers on Blockchain.