Which Countries Will Probably Start Accepting Crypto in 2022?

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by Viktor Kochetov · 4 min read
Which Countries Will Probably Start Accepting Crypto in 2022?
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The possible contender for the role of El Salvador in 2022 is Panama. Unlike El Salvador, Panama is considering the option of accepting all cryptocurrencies as legal tender.

As the value of crypto assets has been trending upwards in the last decade, the regulatory aspect became the focal point of interest for investors, traders, and other market participants. As I am a Kyrrex CEO, let me share the forecasts on global regulatory changes for the crypto space.

It has become more common to hear news about certain countries making regulatory decisions about cryptocurrencies. On the one hand, this news shows that crypto has become too big to ignore. Its recent growth and expansion of the associated platforms and assets have made government reactions a necessity rather than a choice.

On the other hand, regulatory decisions have long-term effects on the crypto space, including its development potential. This is why the decisions of the largest economies, such as China and the US, directly affected the values of cryptocurrencies. In this context, the ability to project these decisions allows expecting the downward and upward movements of the crypto market.

What Happened in 2021?

One of the most significant regulatory news in 2021 was the passing of the Bitcoin (BTC) law in El Salvador. The Salvadoran Congress approved the law in June 2021, making BTC a legal tender in the country. The decision allowed payments for goods and taxes in BTC while excluding cryptocurrency exchanges from capital gains tax. While the economy of El Salvador ranked 104th in terms of its GDP, the decision set an important precedent. Such an experiment also supported the demand side of BTC, pushing its value upwards.

Next, China has issued a ban on all crypto-related activities in the country, making them illegal. The preceding actions also prohibiting mining, which pushed the operations outside the country. The U.S. became the #1 destination for crypto miners as of October 2021. The decision had the initially expected negative effect on the market with the gradual recovery of exchange rates.

In addition to becoming the first in crypto mining, the US has started preparing the regulatory framework for the crypto space, involving the Securities and Exchange Commission (SEC) and the Federal Reserve. At the same time, US President Joe Biden signed an infrastructure deal into law that introduced tax-reporting provisions on digital assets, including crypto. The first cryptocurrency futures-based ETF (BITO) launch on the New York Stock Exchange (NYSE) in October 2021 preceded the regulatory decisions. The maturity of the crypto markets has led to the creation of new tools and regulatory requirements.

The European Union (EU) has been focusing on transparency and Anti-Money Laundering (AML) initiatives. Specifically, the Sixth Anti-Money Laundering and Counter-Financing Directive (6AMLD) came into effect in June 2021 for crypto firms. The 6AMLD was entailing criminal liability for legal persons failing compliance.

What to Expect in 2022?

The mentioned regulatory changes in 2021 show that the crypto market is entering the maturity stage. The US will continue playing an essential role as a financial regulator that sets guidelines for the majority of banking institutions worldwide. Given the pressure of the US Senators on the head of the SEC, it is possible to expect a new set of regulations in 2022 focusing specifically on cryptocurrency markets. However, given the launch of the new instruments, such as BITO on the NYSE, it is possible to cite a certain level of acceptance by the traditional investment community. The EU will follow the same route emphasizing transparency and traceability to prevent illegal activities.

At the same time, China has chosen a different route. The central bank of China, or the People’s Bank of China, has been developing its digital currency eCNY, which could launch in 2022. The digital currency was a response to the growing popularity of crypto and a measure seeking full control over the digital payments market. These efforts represent a limiting factor for the entire crypto space.

The possible contender for the role of El Salvador in 2022 is Panama. Unlike El Salvador, Panama is considering the option of accepting all cryptocurrencies as legal tender. In the same manner, Ukraine and Cuba recognized cryptocurrency transactions on a legislative level. However, these countries were not implementing mandatory acceptance requirements of cryptocurrencies, which occurred in El Salvador. Given the criticism of the major financial institutions, such as the IMF, it is highly unlikely that any country will repeat the way of El Salvador in 2022.

The new regulatory frameworks prepared by the US and EU will play a central role in 2022. Clear rules will propel the markets and lower the current volatility, also limiting the related risks. The value of regulatory permits and licenses will continue increasing amid tighter government controls. In this respect, the crypto-to-asset systems receiving state licenses, like Kyrrex in Malta, will gain dominant market positions.

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Author: Viktor Kochetov

Mr. Kochetov is innovative, dynamic and a highly energetic officer with a proven ability to identify and capitalize on business opportunities. He has a lot of experience in investing and the financial industry. In 2018 he launched Kyrrex, a crypto-fiat ecosystem that has become a wide set of products and services. Viktor believes that cryptocurrency has become a global phenomenon in recent years, although much is still to be learned about this evolving technology.

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