Momentum could be building for digital currencies in 2020, driven by the prospects of sound regulation of virtual asset service providers and Bitcoin halving.
That’s according to Alexander Schell, Executive Director of the Crypto Valley Association (CVA).
“With new announcements expected from the Financial Action Task Force (FATF) regarding Virtual Asset Service Providers (VASPs) in Summer 2020, and the impending Bitcoin halving, the first half of next year will see momentum building around key developments such as these,” he says.
Schell expects FATF’s report to provide some clarity on the way VASPs should operate.
And that could help cryptocurrency adoption rates.
“Increased clarity from the FAFT on its position relating to VASPs globally will be particularly helpful,” he adds. “As the industry focuses on innovation and enterprise adoption, it is imperative that regulators do not implement a policy that will create obstacles and stifle the development of the industry.”
Nick Cowan, CEO of the Gibraltar Stock Exchange (GSX) Group, sees regulation as a crucial factor for the future of digital currencies, too. “Regulation has been a major focal point for many governments seeking to create some clarity, with the UK jurisdiction task force most recently concluding that Cryptoassets, including but not restricted to, virtual currencies, can be treated in principle as property,“ he notes.
But he adds one more factor that could help momentum for digital currencies: central banks warming up to blockchain technologies. “We have also seen many Central Banks looking into the creation of their digital currencies and implementation of blockchain technology in their legacy financial ecosystems,” he says.
Florian Glatz, Co-Founder of Fundament Securities, agrees. “Benoît Cœuré, head of the Innovation Hub at the Bank for International Settlements recently asserted the benefits of digital currency and strong appetite among central banks and the European Central Banks (ECB) concerning their role in financial intermediation,” he says. “2020 will see the People’s Bank of China launch its digital yuan, and the debate for digitizing the Euro will become more acute.”
He thinks that the warming of central banks to digital currencies and hype and attention to Libra could help Bitcoin break its previous peak, and that it will surpass $20,000.
Vaibhav Kadikar, CEO and Founder of CloseCross, isn’t that optimistic. He sees digital asset prices stabilizing after the tumultuous 2019, rather than hitting new highs. “In the new decade, the high volatility of the asset will become a distant memory,” he says. “Price stabilization will spur a renewed interest from institutional investors to enter the space.”
As for Dave Hodgson, Director, and Co-Founder of NEM Ventures, he is skeptical about the impact of regulation and central banks’ engagement with blockchain on cryptocurrency prices.
“In 2019, we have seen an increase in governments, regulators and central banks engaging with blockchain and crypto in general – sometimes positively and sometimes not so positively,” he says. “Notably, the Financial Action Task Force (FATF) recommendations around Know Your Customer (KYC) continues to have an impact on how crypto exchanges operate; the Libra association continues to divide regulators, customers, and the crypto industry, and the launch of the first Security Tokens by both major institutions (Societe Generale) and national markets, such as Germany (BitBond), is making waves.”
Meanwhile, he is looking forward to several trends for 2020. Like Bitcoin’s “halving.” “Previous Bitcoin halving events have grabbed the public’s attention and the technical analysis is lining up to make sure this one is no different,” says Hodgson.
And the releasing significant technology upgrades by multiple large chains – Ethereum with ETH2.0 and NEM with Catapult – both in early 2020. “I believe we will also witness continued innovation in the DeFi space, which is accelerating every quarter now, coupled with increased security token issuance and maturation across the board, and, if the market returns to fundraising, it will be a more well-structured mechanism than last time.”
That’s certainly a lot of “ifs” that could take cryptocurrency markets for another wild ride in 2020.