Yep, you read that number correctly. Reports are in, and the Consumer Price Index (CPI) reached a high of over 7% in December, a metric not seen since 1982. Bitcoin, which experienced severe dips prior to the announcement, quickly saw a 6% increase to $44K amidst the news. With a 0.6% month-over-month rise in inflation over the course of the past year, investors are looking to crypto to hedge their bets. (Coindesk)
The Fed seems to be playing into these sentiments by offering citizens encouragement towards the future of crypto in the national economy. Head of the Federal Reserve and stringent crypto critic, Jerome Powell, is changing his tune regarding the cooperative use of private stablecoin projects. When asked whether the government would prevent the existence of privately-issued stablecoins, his response was “No, not at all.”
It may not seem like much of a statement, but this is a far cry from his previous arguments against these initiatives in the past year, which continue to evolve from an initial disregard for cryptocurrencies entirely to a place of collaboration between the government, blockchain technology, and investors. Whereas Powell’s original intentions seemed bent on replacing crypto with CBDCs (Central Bank Digital Currencies), he now feels that the two can coexist in harmony. (Cryptopotato)
Powell went a step further, promising the long-anticipated release of the Fed’s cryptocurrency report “within weeks.” This report was slated to release in September 2021 and promised to shed light for investors and crypto developers alike, particularly surrounding the government’s interest in CBDCs. That being said, citizens have heard “within weeks” several times prior concerning this report, causing many to not hold their breath. (Coindesk)
This also comes at a time when there is a certain amount of skepticism around government-controlled finances. The idea of the Fed issuing accounts to consumers feels invasive to some, particularly Representative Tom Emmer of Minnesota. Emmer recently proposed a bill to bar the Fed from giving CBDC accounts to citizens in hopes of preventing government collection of individual data. He fears this could be used to manipulate the American people, pointing to China and their digital Yuan—something they are reportedly already using to gather intel—as evidence of this potential flaw in the system. (Decrypt)
Ultimately, those both inside and outside of Congress seek clarity, and the government doesn’t have an unlimited amount of time to provide insight. Crypto continues to thrive nationally, creating pressure for regulation. With a lack of direction on what the future holds, developers and project founders are caught between a rock and a hard place. Even now, the lack of regulation proves to be a thorn in the side of many projects.
Luckily, people like former Twitter CEO Jack Dorsey are working to keep creativity alive by providing developers a safety net. This week, via email, Dorsey announced plans to “help defend developers” by launching a non-profit litigation service for Bitcoin projects. Known as the Bitcoin Legal Defense Program, the entity “aims to minimize legal headaches that discourage software developers from actively developing Bitcoin and related projects.” (Cointelegraph)
No amount of litigation could slow advancement anyway, particularly at the rate that crypto has been going in the United States. Ric Edelman, Founder of Edelman Financial Engines, spoke to the promise of crypto’s immense growth, citing a defining factor as being the“major institutional involvement” seen with Bitcoin over the last year. Despite the bearish start to 2022, Edelman remains optimistic, predicting that at least one-third of Americans will own Bitcoin in the coming year.
“We’re already at a quarter of that number with 24% of Americans owning Bitcoin,” said Edelman. “It won’t be that much of a stretch for it to get to one-third. Bitcoin is becoming more and more mainstream. People are hearing about it everywhere — it isn’t going away.” (Cointelegraph)
This positive outlook is echoed globally as crypto adoption continues to explode across the world. The Hong Kong Monetary Authority (HKMA) announced intentions to have a crypto regulatory framework outlined for traders and businesses as early as July 2022, even going so far as to motivate the crypto community to provide input on how best to proceed.
“The rapid development of crypto assets, particularly stablecoins, is a topic of keen attention in the international regulatory community as it presents possible risks regarding monetary and financial stability,” HKMA said. “We encourage current or prospective players in the stablecoins ecosystem to respond to this paper and submit relevant views to us, so that we could take the feedback into account when formulating the regulatory framework.” (Cointelegraph)
And crypto isn’t just helping calm America’s inflation fears. Strike, the digital wallet built on the Lightning Network, brings Bitcoin to Argentina in hopes of helping citizens fight high levels of inflation across the country. Founder and CEO of Strike, Jack Mallers, announced this expansion with pride, expressing convictions that Bitcoin could provide hope to the people of Argentina as a monetary provider of “basic human freedoms.”
“Bitcoin is the first and only monetary network in human history that works everywhere and is open to everyone,” said Maller. “It functions in New York, San Salvador, and Buenos Aires equally. We’ll continue expanding throughout all of Latin America and globally until everyone has reliable access to the world’s best monetary network.” (Cryptopotato)
It remains true that the main catalyst for overall equity is economic equality. While rising inflation rates make this reality seem unattainable, crypto offers hope and solutions. Assets like Bitcoin and stablecoins provide solutions for inequitable gaps in our economy. It’s a great sign that even the most stubborn government voices are bending in favor of regulation and national implementation because it shows an understanding of what’s happening outside of the doors of Congress. We’re getting through to them, and every small step forward takes us a step closer to financial equity, both here and abroad.
Top market movers as of January 14, 2022
- Dogecoin (DOGE) +20%
- Terra (LUNA) +13%
- Monero (XMR) +12%
- dYdX (DYDX) +11%
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