Business View Magazine | August 2022

15 BUSINESS VIEW MAGAZINE VOLUME 9, ISSUE 8 E xperts seem convinced that the dramatic decline in cryptocurrency values that began in late 2021 is signaling a new season for the emerging asset class. The term that is now commonly being used for the season is “crypto winter.” The industry’s response to the considerable cooling of the market, as well as the increased activity in the area of cryptocurrency regulation, provide valuable insight into the state of the cryptocurrency market as we enter the second half of 2022. Facts and figures reflecting the state of crypto The crypto market experienced a dramatic drop at the end of 2021. After peaking at a value of approximately $3 trillion in November, it started a decline that left its value at $866 billion in early July 2022. In June 2022, two of the more well- known coins – Bitcoin and Ethereum – continued to lose value. Bitcoin’s price fell nearly 38 percent during that month; Ethereum’s fell more than 42 percent. A loss of more than $2 trillion is well beyond the typical volatility that has marked the crypto market. As a result, some industry players have made moves that hint they are settling in for a long winter. For example, crypto exchanges laid off approximately 1,700 employees as the reality of the winter conditions took hold. Coinbase, which is considered one of the top crypto exchanges, announced that it would be laying off 18 percent of its employees. Regulation is a hot topic that is influencing the world of crypto The drop in crypto values has inspired some to push harder than ever to bring regulation to the industry. Cryptocurrencies currently stand outside of regulatory purview in the United States, and those opposed to regulation do not want to see crypto’s decentralization threatened. Meanwhile, those in favor of a more heavy-handed approach argue that crypto’s volatility makes it dangerous for consumers and has a negative effect on other aspects of the economy. This debate continues to take place in Congress and has prompted action from several bipartisan bicameral Members through the introduction of bills. The Digital Commodity Exchange Act (DCEA) was introduced in the US in April 2022 to create a reporting regime that would give the US federal government more oversight of crypto markets. Congressman Glenn Thompson (PA-15), the top Republican on the House Agriculture Committee and the lead sponsor of the DCEA, said it would “close the regulatory gaps that have created uncertainty in the marketplace and discouraged innovation in the United States.” The Global Digital Asset and Cryptocurrency Association (Global DCA) believes the DCEA strikes the right balance between establishing responsible rules of the road and allowing the US to remain a global innovation leader. We look forward to Congressman Thompson’s continued work to bring certainty to the industry and stand ready to support those efforts. Additionally, a few months later in June 2022, a bipartisan group of US Senators unveiled the Responsible Financial Innovation Act, which would define various terms and create a regulatory framework for cryptocurrencies. The Act, which is also known as the Lummis-Gillibrand Act, would bring coins such as Bitcoin and Ethereum under the regulatory authority of the Commodities The State of the Cryptocurrency Market and the Global DCA By: Gabriella Kusz/Global DCA