FIVE new fintech trends to watch in cryptocurrency and DeFi
The process has been hampered by several crypto winters in recent months that have seen the value of investments crash and armchair investors squirm. But now is not the time to turn your back on the heady crypto space, as new developments and trends seem to stabilize and energize digital currencies.
#1 Crypto exchanges offer more choices
Today, more hobby investors than ever are dipping their toes into the crypto space through well-established crypto exchanges that offer advice and navigation through the tricky DeFi landscape.
Data shows that as many as 20,268 digital currencies exist, but currently less than 500 of them are considered tradable via an exchange. Crypto exchanges only deal in certain types of crypto, but the spectrum is expanding, opening up a more diverse market for investors.
The biggest names in crypto exchanges usually provide the most choices. For example, Kraken and Coinbase are known for their wide range of coin trading, with Coinbase currently trading over 450 different cryptocurrencies, while Kraken will trade 160. Robinhood, meanwhile, focuses on the few prominent currencies but offers commission-free trading. on some coins.
#2 Crypto regulation is being tightened
According to Tom Crosland, CEO of CoinZoom – the crypto-to-cash conversion fintech – regulation will be the main driver. “Some in the crypto space oppose heavy regulation, arguing that it would stifle innovation and contradict the highly decentralized foundation on which cryptocurrencies were built. In this scenario, financial workforces would take a hands-off approach, leaving the industry to regulate itself .”
Crosland argues that the implementation of a clear and well-developed set of regulations will be crucial to integrating cryptocurrencies into the global financial system. “For the industry to continue to grow and become mainstream, customers need to have confidence in the infrastructure and framework that underpins it – and that starts with regulation.”
He points out that trust cannot be built in an environment that “allows bad actors to roam freely”. In fact, the UK’s Financial Conduct Authority (FCA) recently reported a 100% increase in alleged crypto-related fraud in 2021 compared to 2020. The cost of cryptocurrency fraud also stands at $19.2 billion worldwide.
He believes such eye-opening data is a clear driver for change. “Clear accounting rules are critical to achieving this, not only helping companies shape their crypto strategies, but also giving them the tools they need to make crypto a safe and orderly marketplace for investors.”
#3 Cryptocurrency insurance is a growing trend
More and more insurance providers are realizing the need to offer protection options when it comes to digital assets.
Breach Insurance is an insurtech startup that provides insurance technology and regulated insurance products for the crypto market. The company’s Crypto Shield product is available for more than 20 cryptocurrencies and for consumers using Binance US, Coinbase, CoinList and Gemini. It is also backed by a premier insurance company and reinsured by a global crypto insurance industry leader.
Co-founder Eyhab Eejaz explains: “We don’t mean whether crypto is a security, a currency, something more like gold, or whether it’s real estate. Our position is that it is a thing that people choose to buy and own. It’s not illegal because the government taxes you on it. Last time I checked, they don’t tax you on drugs or anything more illegal. So it’s undefined, but it’s something people value – so much so that they choose to put some of their wealth into it.”
#4 More countries are adopting crypto
There are still many countries globally that do not tolerate the use of cryptocurrency. But this is slowly changing. For example, according to the 2022 Thomson Reuters Cryptos Report Compendium, crypto is now far more widely accepted globally than it once was. Only a small selection of nations remain closed to it. For example, the Bolivian government banned cryptocurrencies in 2014, believing it would lead to economic instability and tax evasion. “It is illegal to use any form of currency that is not issued and controlled by a government or an authorized entity,” Bolivia’s central bank11 (BCB) said.
But El Salvador adopted Bitcoin as legal tender in 2021, Brazil has embraced the digital currency market in response to fiat currency instability, and in December 2022 a new cryptocurrency law was introduced in Peru, which will define crypto assets and regulate crypto transactions. Dubbed the ‘Crypto-asset Marketing Framework’, the law, according to the report, is “seen as a first step to establish regulatory clarity for virtual asset service providers and others involved in blockchain and cryptography”.
#5 Metaverse is the perfect home for crypto
Meanwhile, in the Western Hemisphere, digital currency is here to stay and is creating new innovations in gamification, online commerce and through opportunities in the metaverse.
As Manish Patni, Lead Product Manager for Europe for Finacle, points out: “A recent report from JP Morgan has estimated the market and business opportunities for companies in the metaverse at over USD 1tn in annual revenues, while the Zion Market Research study claimed that the metaverse the market is expected to grow at 39.5% CAGR to reach $400.5 billion by 2028.
He says digital platforms and tech giants are preparing for the metaverse, which is predicted to have a $13 billion economy and five billion users by 2030.
With so much transition taking place, the use of cryptocurrency globally will continue to increase. “Banks and fintech have the potential to lead, as the world has shifted to digital interactions and adoption of digital fintech solutions due to the pandemic and subsequent shutdowns. The trend is likely to continue in the metaverse, where fintechs will drive most financial transactions.”
