Crypto

Essential Cryptocurrency Trends to Keep an Eye On

Published

4 months ago

September 12, 2024

Essential Cryptocurrency Trends to Keep an Eye On

The cryptocurrency landscape is in constant flux, with new trends emerging as technology and market dynamics evolve. For investors and enthusiasts alike, keeping a finger on the pulse of these trends is crucial for making informed decisions and staying ahead in this volatile market. Here, we explore some of the most essential cryptocurrency trends to watch closely, providing insights into what the future might hold for digital currencies.

The Rise of Central Bank Digital Currencies (CBDCs)

One of the most significant trends in the cryptocurrency space is the development and implementation of Central Bank Digital Currencies (CBDCs). Governments worldwide are exploring CBDCs as a means to digitize their fiat currencies, offering a state-backed alternative to decentralized cryptocurrencies like Bitcoin. As of 2023, over 130 countries are actively researching or developing CBDCs, with China leading the way through its Digital Yuan initiative.

According to the Atlantic Council, 114 countries, representing over 95% of global GDP, are exploring a CBDC. Among them, 11 countries have already launched their digital currencies, with others like the European Union and the United States in advanced stages of research. The adoption of CBDCs could reshape the global financial system, offering more efficient payment systems while posing competition to established cryptocurrencies.

Adoption of Layer 2 Solutions

Scalability remains a significant challenge for many blockchain networks, especially those like Bitcoin and Ethereum, which often struggle under high transaction volumes. Enter Layer 2 solutions—these nifty technologies operate on top of existing blockchains, boosting transaction speed and slashing fees. They’re becoming a go-to trend for tackling the scalability dilemma. And while we’re talking about speed, it’s worth mentioning Solana, a blockchain that’s making waves for its lightning-fast transactions. Alongside this, the best Solana meme coins, like Sponge V2 and SpacePay, are gaining popularity as the network continues to grow, showing just how diverse the crypto space is becoming.

The Lightning Network, a Layer 2 solution for Bitcoin, has seen increased adoption, with its capacity surpassing 5,000 BTC in 2023, according to BitcoinVisuals. Similarly, Ethereum’s Layer 2 solutions, such as Optimism and Arbitrum, have gained traction, with billions of dollars in total value locked across these networks. As the demand for faster and cheaper transactions grows, Layer 2 solutions are likely to play a crucial role in the future of blockchain technology.

The Growth of Decentralized Finance (DeFi)

Decentralized Finance, or DeFi, continues to be a major force driving innovation in the cryptocurrency sector. DeFi platforms offer financial services like lending, borrowing, and trading without the need for traditional intermediaries like banks. This trend has gained significant traction, with the total value locked (TVL) in DeFi protocols reaching over $80 billion in 2023, according to DeFi Pulse.

DeFi’s appeal lies in its ability to democratize access to financial services, particularly in regions with limited banking infrastructure. However, the sector faces challenges, including regulatory scrutiny and the risk of smart contract vulnerabilities. Despite these hurdles, DeFi is expected to grow as more users and developers embrace decentralized financial solutions, making it a trend worth monitoring closely.

Increased Regulatory Scrutiny

As the cryptocurrency market matures, it has attracted increased attention from regulators worldwide. Governments are becoming more proactive in drafting and enforcing regulations to address issues like fraud, money laundering, and investor protection. In 2023, the global cryptocurrency market saw several high-profile regulatory actions, including the U.S. Securities and Exchange Commission (SEC) suing major exchanges for allegedly offering unregistered securities.

The impact of regulation on the cryptocurrency market cannot be understated. According to a report by Chainalysis, the value of illicit transactions involving cryptocurrencies dropped by 57% from 2022 to 2023, largely due to stricter enforcement of regulations. While some investors fear that regulation could stifle innovation, others believe it will bring legitimacy to the market, attracting more institutional investors and fostering long-term growth.

The Growing Importance of Environmental Sustainability

Environmental concerns have increasingly become a focal point in the cryptocurrency debate, particularly around the energy-intensive nature of Proof of Work (PoW) mining, used by Bitcoin and other cryptocurrencies. The high energy consumption associated with Bitcoin mining has led to criticisms and calls for more sustainable alternatives.

In response, the industry has seen a shift towards greener practices. For instance, Ethereum’s transition to Proof of Stake (PoS) in 2022, known as “The Merge,” reduced its energy consumption by approximately 99.95%. Moreover, new projects are emerging with a focus on sustainability, such as Chia Network, which uses a Proof of Space and Time consensus mechanism that is less energy-intensive. As environmental issues continue to gain importance globally, sustainable practices within the cryptocurrency industry will likely become a critical trend.

The Expanding Role of NFTs in the Digital Economy

Non-Fungible Tokens (NFTs) have expanded beyond the realm of digital art and collectibles, finding applications in gaming, real estate, and intellectual property rights. In 2023, the global NFT market was valued at over $20 billion, with major brands and celebrities continuing to explore this space.

One of the most notable developments in the NFT space is its integration with the metaverse, where virtual assets and experiences are bought, sold, and traded as NFTs. Platforms like Decentraland and The Sandbox have seen significant user engagement, with virtual land sales generating millions of dollars. As the metaverse and digital economy grow, NFTs are expected to play an increasingly central role, making this a trend that cannot be ignored.

Crypto

Sen. Bernie Moreno supports loosening regulations on some cryptocurrency assets

Published

3 hours ago

January 8, 2025

Press Room

Sen. Bernie Moreno supports loosening regulations on some cryptocurrency assets

WASHINGTON, D.C. — Bernie Moreno’s victory in the Ohio Senate race was a big win for the cryptocurrency industry, which spent more than $40 million supporting his candidacy. Now in office, Moreno said he would support legislation the industry is seeking that would govern how it is regulated.

What You Need To Know

Sen. Bernie Moreno said he would support new legislation to govern how the cryptocurrency industry is regulated

The crypto industry spent tens of millions of dollars to support Moreno in the Ohio Senate race

Moreno’s support of laws sought by crypto interests is a stark contrast from his Democrat predecessor, former Sen. Sherrod Brown

Moreno has long been involved with the crypto industry. He has a background in blockchain, the same technology used to for cryptocurrency. He previously founded Champ Titles, a digital car titling company that was among the first to use blockchain for digital titles.

The cryptocurrency industry also helped fuel his Senate win. Super PAC Defend American Jobs spent $40.1 million on the race, more than any other outside group. The super PAC is affiliated with Fairshake, another super PAC that is funded by Coinbase, Ripple and other crypto companies.

Moreno’s support of laws sought by crypto interests is a stark contrast from his Democrat predecessor, former Sen. Sherrod Brown.

As Chairman of the Senate Banking Committee, Brown blocked advancing a bill to loosen the regulation of some crypto assets, known as the Financial Innovation and Technology for the 21^st Century Act, or FIT 21. The bill would reclassify many kinds of crypto as commodities rather than securities. Rules for commodities, examples of which include oil, wheat or electricity, are generally looser than those for financial securities like stocks or bonds. The bill passed the House last Congress, but remained stalled in the Senate Banking Committee.

Moreno now sits on the Banking Committee, as well as the Senate Committees for Homeland Security and Governmental Affairs; Commerce, Science and Transportation; Budget; and Banking, Housing and Urban Affairs.

“I got the committee assignments I wanted,” Moreno said. “Senator Thune was kind enough to get me on Banking.”

Moreno disagreed with the stance Brown had taken against legislation like FIT 21, countering that the rapidly growing cryptocurrency industry needs better clarification on regulations.

“Crypto is not looking to be deregulated. Crypto is looking to be treated fairly, to have transparent, consistent regulations that treat everybody equally and fairly. That’s what we want,” he said. “Look, at the end of they day, I understand how the technology works and I understand the industry. My opponent had no idea.”

With a new Congress, the House would have to re-introduce and pass another cryptocurrency regulation bill. FIT 21 previously received bipartisan support, with nearly all Republicans and about a third of Democrats voting for it.

Similar legislation would likely move more quickly this Congress, in which Republicans control the House, Senate and White House.

Crypto

Cryptocurrency options in 401(k) plans: Here's what to know to make the most of your workplace retirement plan

Published

11 hours ago

January 8, 2025

Press Room

Cryptocurrency options in 401(k) plans: Here's what to know to make the most of your workplace retirement plan

The rally in bitcoin and other cryptocurrency prices has generated excitement among some investors, but investment advisors are largely still skeptical that those volatile assets belong in a 401(k) plan or other qualified retirement savings plans.

Crypto was one of the fastest-growing categories of exchange-traded funds in 2024. The most popular of these funds, the iShares Bitcoin Trust ETF (IBIT), has ballooned to over $50 billion in total assets.

Although crypto is a small part of the 401(k) plan market, it could grow substantially in 2025.

President-elect Donald Trump has suggested he will create a strategic reserve of bitcoin for the U.S. and has nominated Paul Atkins, a cryptocurrency advocate, to chair the Securities and Exchange Commission. The SEC’s approval of spot bitcoin and ethereum exchange-traded funds in 2024 was a key change for the industry.

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Here’s a look at more stories on how to manage, grow and protect your money for the years ahead.

The law covering 401(k) plans requires plan sponsors to act as fiduciaries, or in investors’ best interest, by considering the risk of loss and potential gains of investments. The Labor Department has cautioned fiduciaries to exercise “extreme care” before adding crypto options to a 401(k) plan’s core investments.

Labor Department officials, however, haven’t required fiduciaries to select and monitor all investment options, like those offered through self-directed brokerage windows, according to the Government Accountability Office. Nearly 40% of plans now offer brokerage windows in their 401(k) accounts, according to a 2023 survey by the Plan Sponsor Council of America.

Pros and cons of crypto in a 401(k) plan

Fernando Gutierrez-Juarez | Picture Alliance | Getty Images

Views are mixed about how much crypto to add to retirement savings or if it’s wise to allocate any at all.

Some financial advisors say crypto can work for a 401(k) plan because its movements are unconnected to the stock market and it functions even if a fiat currency is devalued.

“Crypto should be a part of a 401(k) plan because it’s a non-correlated alternative asset class,” said Ivory Johnson, a certified financial planner and founder of Delancey Wealth Management in Washington, D.C.

“With that said, investors need to ensure that they take their risk tolerance and time horizon into account which will define the target allocation,” said Johnson, who is also a member of the CNBC Financial Advisor Council. “The more volatile an asset class is, the less you need of it in the portfolio because you presumably get more bang for your buck.”

Johnson recommends cryptocurrencies range from 2% to 8% of an investor’s portfolio.

Other experts point to volatility and risk as reasons to be conservative.

“People saving for retirement should probably be even more conservative, because adding crypto to a 401(k) plan would significantly increase the risk that your retirement nest egg could suffer a large loss at the wrong time,” said Amy Arnott, a chartered financial analyst and portfolio strategist with Morningstar Research Services.

Morningstar found that since September 2015, bitcoin has been nearly five times as volatile as U.S. stocks, and ether nearly 10 times as volatile. That type of volatility adds a large risk to a portfolio even with a small amount invested.

401(k) contribution limits for 2025

Regardless of what assets are in a 401(k) plan, there are limits to how much you can contribute. For 2025, an employee can contribute up to $23,500 in a 401(k) and other employer-sponsored plans — that’s $500 more than in 2024.

People age 50 or older can make a “catch-up contribution” of up to $7,500. And those age 60 to 63 years old can supersize that, with a catch-up contribution of up to $11,250 for 2025.

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Crypto

Prospects for Improved Relations Between the Cryptocurrency Industry and Banks Under the Trump Administration

Published

19 hours ago

January 8, 2025

Press Room

Prospects for Improved Relations Between the Cryptocurrency Industry and Banks Under the Trump Administration

With just over two weeks left until Donald Trump takes office, there are prospects that the relationship between the cryptocurrency industry and the banking sector, which has been at odds, could change positively.

According to The Block, a cryptocurrency-focused media outlet, TD Cowen predicts that under the Trump administration, banks may see an improvement in their relationship with the cryptocurrency industry.

Jaret Seiberg and the Washington Research Group stated in a report, “Banks have the responsibility to comply with Anti-Money Laundering (AML) and Bank Secrecy Act (BSA) regulations and manage risks such as liquidity and concentration,” adding, “If the Trump administration takes power, it is inevitable that the relationship between traditional finance and the cryptocurrency industry will change positively.”

However, they also mentioned that some banks may still take a cautious stance. They said, “Some banks may still see risks in increasing relationships with cryptocurrencies,” and “this could be targeted by new banks.” Additionally, stablecoins (assets linked to the value of fiat currency) were highlighted as the cryptocurrency sector that banks would be most interested in, as banks hold cash, making them advantageous for issuing stablecoins.

In the U.S., there has been ongoing conflict between the cryptocurrency industry and the traditional financial sector, particularly banks. There have been conspiracy theories suggesting that banks have implicitly enforced cryptocurrency-related sanctions, known as Operation Chokepoint 2.0. Some cryptocurrency figures have claimed that banks have tried to restrict access to traditional financial services for the cryptocurrency industry.

Brian Armstrong, the founder of Coinbase, commented on Operation Chokepoint 2.0, saying, “It actually happened. Unethical and un-American actions occurred under the Biden administration,” and “We are currently gathering evidence from victims through the Freedom of Information Act (FOIA).”