The year 2021 was a watershed moment for cryptocurrencies. But what will happen in 2022?
Over the last year, we've seen Bitcoin hit many new all-time high values, followed by significant dips, and increased institutional buy-in from major corporations. Late last year, Ethereum, the second-largest cryptocurrency, also reached a new all-time high. New bitcoin restrictions have piqued the curiosity of US government authorities and the Biden administration.
Meanwhile, interest in cryptocurrency has soared: it's a hot topic not only among investors, but also in popular culture, thanks to everyone from long-time investors like Elon Musk to that kid from high school on Facebook.
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Regulation of Cryptocurrencies
Expect more discussions about bitcoin regulation in the future. Stablecoin regulation has piqued the curiosity of US officials.
Lawmakers in Washington, D.C., and around the world are attempting to come up with ways to make bitcoin safer for investors and less alluring to thieves.
"One of the major overhangs in the crypto business globally is regulation," says Jeffrey Wang, president of the Americas at Amber Group, a crypto financing firm based in Canada. "We would greatly appreciate unambiguous regulation."
Chairman of the Federal Reserve, Jerome Powell, has stated that he has "no intention" of banning cryptocurrencies like Ethereum in the United States, while SEC Chairman Gary Gensler has constantly remarked on both his own agency's and the Commodity Futures Trading Commission's actions.
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What impact could new regulations have on investors?
Crypto tax reporting measures were included in the president's $1.2 trillion bipartisan infrastructure package, which might make it easier for the IRS to trace crypto activity among Americans. That's why, even before the new regulation, experts recommend that investors maintain track of any capital gains or losses on their crypto assets. The new regulations may also make it easier for investors to disclose cryptocurrency transactions correctly.
Shehan Chandrasekera, CPA, head of tax strategy at CoinTracker.io, a crypto tax software startup, recently told NextAdvisor, "Exchanges will have to submit 1099-B tax forms with cost basis information to investors." "The burden of crypto tax reporting will be greatly reduced."
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Approval of Crypto ETFs
Last October, the first Bitcoin ETF debuted on the New York Stock Exchange, marking a significant step forward in this area. The development represents a new and more traditional approach to investing in cryptocurrency. The BITO Bitcoin ETF allows investors to acquire cryptocurrency directly from traditional investing brokerages such as Fidelity or Vanguard, where they may already have accounts.
"We do it in the stock market, we do it in the bond market, and people might want it here," Gensler said last summer at the Aspen Security Forum.