The crypto economy seems to swing back in full force. But will the momentum remain or is it in fact just a bear trap. Let's take a look at what is happening around the world in the crypto ecosystem and see if we can make an informed conclusion. We can first look at 2 weeks ago when crypto predictions were still going strong despite most coins still diving to their lowest yet. Back then we mentioned how the crypto nay-sayers were rejoicing at the people buying "fake" money on the internet. Well, the crypto back-lash from a certain demographic continues with twitter of all places being a place for them to vent. Unfortunately for a lot of these people there seems to be some sort of confusion going on. They rail against NFT's and because of that they just add cryptocurrencies and even blockchain technology in the mix as collateral damage. For our audience it is not necessary to explain the difference between NFT and crypto but for those that might not be aware because of lack of interest, NFT's (or non fungible tokens) are similar to digital collectables that can be bought and sold online. It is not the same thing as a digital currency. Sure, it is a (mostly) digital product that has value attached to it but that is where the similarities end. But in the end this just shows how crypto is unfortunately still quite volatile and just like a teenager can have mood swings depending on what some say and do about it. Speaking of what people say and do let's take a look at who and why crypto is recapturing its huge market.
A look at the increase in crypto lobbying
With future legislation and restrictions coming to blockchain technology and cryptocurrencies as a result, crypto lobbying has increased by a large year. A recent study shows that just last year alone, crypto lobbying increased by almost 116% with as much as $9.56 million spent on seeking influence and understanding from politicians and officials. Of course, depending on which country you currently reside in you might hear spending money to influence politicians and think: wait, isn't that illegal or unfair? Well, we cannot comment on the fair part but for countries like the US, spending money in politics is lawful because it is called lobbying. It might just be a neat little trick they found in order to get more money but in the end this is how things work there. Also if you think for a second that the same thing does not happen in your country only it's hidden under the table, you have a very naïve look at how politics work.
The study made by Cryptohead.io and written by James Page notes that Robinhood Markets, the California-based financial company, is the largest contributor to the $9.56 million spent on lobbying in 2021. To be more exact, approximately 14.12% of the expenses made on promoting crypto or $1.35 million was all made by Robinhood. Coming up in second place with as much as $900.000 spent towards these campaigns is the blockchain organization behind the crypto token XRP, Ripple labs. And in third place, spending $785.000 was Coinbase who leveraged 23 lobbyist compared to the 16 of Robinhood and 12 from Ripple labs. Aside from this study, crypto lobbying is expected to continue and grow alongside with interest in the market. It is a necessary reaction to potential threats to the crypto ecosystem like outright banning or severe restrictions. Of course lobbying is not the only reason cryptocurrencies are on the rise again.
Of course there are other factors like the recent coalition formed from 17 digital asset companies with the main purpose is to be: "committed to a safe and sensibly-regulated crypto industry." The appropriately named Crypto Market Integrity Coalition (CMIC) has some of the biggest names in the industry as members, names like: Coinbase, Circle Internet Financial, Huobi Tech, Bitmex, Cryptocompare, Solidus labs and more. Their goal is to combat market manipulation and abuse. CMIC thus notes that "Through the pledge, the coalition seeks to send an unequivocal message at this critical moment in the evolution of digital assets: The crypto industry has made enormous strides to improve market integrity in the past few years". The pledge in question can be found on their website and it basically asks industry leaders to adhere to 3 basic principals which will greatly help the crypto ecosystem:
- Industry can drive integrity by attesting to their actions to prevent manipulation and abuse.
- Public confidence and investor protection are elevated through integrity.
- Greater integrity brings responsible crypto market growth.
Nigeria blockchain advocates for crypto
If you have had a lot of contact with emails and businesses it is highly likely you have received or at least heard about Nigerian scams. Regardless of what percentage of scammers in the world the ones in Nigeria amount to, the fact remains that they are the most known for various reasons. You can then see how having such infamy will put a certain stigma on new business opportunities and create overzealous skepticism. But there are still those that believe in cryptocurrencies and their legitimacy. Such is the case for the Nigerian blockchain advocacy group, the Stakeholders in Blockchain Technology Association of Nigeria (SIBAN) who are pushing to regulate crypto and present it as being legit. They note that such regulations will both encourage innovations while at the same time keeping away potential scammers and frauds. They are unfortunately fighting an uphill battle as there has already been a year since the Central bank of Nigeria (CBN) made the decision to block cryptocurrencies from the banking system. The crypto ban seem to be one of the many knee-jerk reaction of governments around the world in response to a potential crisis that woefully overstay their welcome and do more harm than good. These decisions don't just stop at crypto and blockchain technology, with the ever increasing power that the media seem to have governments are to quick to make rash decisions in order to "protect the people" without thinking of medium and long term consequences.
The consequences in this case are already being felt as crypto is still going strong but it just went underground putting more people in danger and creating more opportunities for the more unsavory of people. So looking at this and the overall situation developing SIBAN, after one year since the decision to ban crypto, pleads with CBN to revisit their decision. SIBAN works to prove the legitimacy and crypto as well as its potential benefits. They even started a campaign on Twitter and made passionate statement about the benefits of regulating crypto: "Today we advocate equal access to banking and financial services by virtual asset service providers (VASPs) without discrimination in accordance with the Nigerian Constitution, applicable laws, and particularly Nigerian laws on anti-money laundering and combating the financing of terrorism (AML/CFT) regulations. Amongst other benefits, this approach will aid investigations by our law enforcement agencies, including the Nigeria Police and the Economic and Financial Crimes Commission (EFCC),". In the end it all comes down to power and control. An old outdated system holding on to power and refusing to let it go back to the people. What will Nigeria do in the future we can only speculate, but as previously mentioned, decisions such as outright bans will hurt people and the economy more than actually helping the situation.
Embracing of crypto continues around the world
Some may argue against this point, but it seems we can draw similarities in a way between Covid restrictions and crypto acceptance or banning. Exaggerated reactions in both cases have done more harm then good and will affect the world economy in the long run. There is also the number of nonsensical decisions in both cases that just make the entire situation worse. Of course, the major difference being that you are allowed to talk about crypto and publicly denounce it if you want but you will become a social pariah if you say anything bad about pandemic related topics. Maybe at one point blockchain technology will help us have a more free internet were opinions are not greatly regulated by governing bodies. This is why the crypto ecosystem thriving should be celebrated as a good thing. Speaking of good news, at least for India, there seems to be progress regarding cryptocurrency legislation. The Indian government has reportedly stated that they will take a balanced approach when it comes to legislating and regulating crypto. To do this they will first look around at what is happening internationally in terms of crypto regulations. Economic Affairs Secretary Seth noted that policy regarding crypto will not be finalized until G20 meetings and that: "Whatever regulations are brought in, unless there is a global consensus they won’t succeed. It may succeed 80%-90% but it will not be a comprehensive solution."
To have a consensus at a global level with regards to regulating cryptocurrencies still sounds far fetched for now. The first obstacle is obviously national interests. Every country participating in this legislation and regulations will have to consider their own interest first. And if that country already holds a considerable amount of economic power on the global market it will definitely try to impose some of its interests in regulating crypto. This could lead to confusion between crypto users from different countries. Also, instead of cryptocurrencies remaining a tool for people to break free of restrictions of a centralized system, they could just become another cog in the big money making machinations around the world. There is also the added fact that different areas of the world accept crypto ad different rates. Some outright ban it or impose heavy restrictions while others create Bitcoin city. How will this pan out in the long run it is anyone's guess and since everyone is making predictions left and right and we can see that the interest in crypto, one way or another, is growing we can also throw our 2 cents in. Even if the market situation now is a bear trap and cryptocurrency values will drop again to a new low, a highly unlikely situation, the crypto ecosystem will continue to grow and thrive. The technology and implications behind, meaning the implementation of decentralized systems of trade, are much to appealing and important to simply be scrapped. And if, let's say you don't believe that the appeal of the technology will be enough, then just follow the money. This is why we proposed to look at the who's and why. What big names are into crypto and why. The answer is almost always the same. It contains immense value as well as huge potential for growth. Nobody could say no to an asset that can gain 10 times it's value in 5 years.