Stablecoins, Regulatory Issues and a Bear Market Marked the Crypto Space in 2018
Bitcoin (BTC) and virtual currencies had a very moved year since the very beginning. During the whole year, virtual currencies were falling and reaching new lows in the last year. However, there are some other things that are worth mentioning during 2018.
For example, 2018 has seen several countries and regulatory agencies start to participate more actively in the crypto market and trying to regulate it. For example, the U.S. Securities And Exchange Commission (SEC) has tried to play a more active role in the virtual currency space.
The regulatory agency of the United States has been going behind Initial Coin Offerings (ICOs) after a very positive end of 2017 and beginning of 2018. ICOs were gathering millions of dollars in funds but some of them were just scams.
The SEC has also announced enforcement actions against two ICOs, Airfox and Paragon. Both of them have been accused of selling unregistered securities and will have to give back to investors their funds. Additionally, they will have to pay a $250,000 fine.
Other countries such as Japan or Malta have been trying to create clear regulatory environment for companies to start operating in these countries and protect investors in the space. However, South Korean and China did not reduce the hard regulations and bans imposed during the last year.
Larry Cermak, The Block’s Head and crypto analyst commented that the market warned investors that believed that Bitcoin was only going to keep growing.
“It was a necessary wake up call,” he said. “We say that it was like any other asset and built on speculative mania, hyped by irresponsible ICO advisors. Crypto was one of the biggest bubbles we’ve seen in the last 100 years. But the market was not as irrational as people thought. That and the fact people are building on the infrastructure, as a result, are the reasons I’m still in this space.”
Although the price has been falling in 2018, adoption and other parameters have been improving as well. Compared to the beginning of the year, Bitcoin’s network is much more secure than before. Segregated Witness (SegWit) has reached close to 40% of the addresses and it keeps growing. The Lightning Network (LN) has also registered an important increase in the number of nodes and network capacity.
Another important trend that the cryptocurrency market experienced during 2018 was the surge and growth of stablecoins. Tether (USDT), the largest and most popular stablecoin in the market was involved in several controversies during this year. It has changed banking partner and it has also been accused of manipulating Bitcoin prices during bear markets.
This is why Gemini or Circle released their own stablecoins. Now, investors are able to decide which stablecoin to use rather than depending only on Tether. Some of these stablecoins are Gemini USD (USD), Paxos Standard (PAX) or USD Coin (USDC).
In the near future, the Intercontinental Exchange (ICE) will be launching an institutional-grade platform for investors. This would allow Bitcoin to reach new mainstream and important investors in the market. Additionally, the SEC could also approve a Bitcoin ETF as soon as February 2019.
In 2018, there have been several proposals made by companies in the space for the SEC to approve a Bitcoin ETF. Nevertheless, none of these proposals has been approved yet. Most of them have been delayed or just rejected by the regulatory agency.