Despite the present scenario, which has been labeled by experts as a “bear market,” trade in cryptocurrencies continues, although at a slower pace than during a bull market.
Big players are anxious, major event needed
Retailers and institutional investors alike are reluctant to join the market due to anxiety. Before the crypto business swings back toward stronger corporations and clearer laws, “complete panic” and “huge volatility” are on the horizon, according to Kevin O’Leary. Despite the massive sell-off, some crypto experts claim that the market needs to witness another major event before it can resume its rapid development.
Problem caused by “idiot managers”
Investors, however, are investigating the current market situation in order to ascertain the cause of the big dump; a recent analysis by Coin Telegraph suggests that the current market situation is the product of over-leveraged centralized financial corporations like Voyager and Celsius. O’Leary said that the problems with those kinds of companies were caused by “idiot managers” who needed to be gotten rid of to make the industry more successful.
New G20 regulations might ease turmoil
There will soon be regulations in place to assist ease the cryptocurrency market’s current turmoil. All of the G20 nations are represented on the Financial Stability Board (FSB), and they plan to propose worldwide legislation for cryptocurrencies and stable coins in October 2022. Regulation of stablecoins presents a further formidable challenge (Coin Telegraph, 2022).
Stable coins important, but must keep their peggings
Importantly, many people lost everything when the Terra USD (UST) was de-pegged. O’Leary made it clear that “we need more stable coins, as many as there are commodities,” but they must keep their peg. A positive development, he said, was the de-pegging of Terra USD (UST) in May. Additionally, others are unable to follow the same route out. Furthermore, he warned that “Tether breaking peg is going to be a significant concern for regulators as they look at what stables are appropriate for platforms to employ.”
The consensus among specialists is that USD Coin (USDC) is the best stable coin at the moment.
“Same activity, same risk, same regulation”
The Financial Stability Board (FSB) issued a statement on the 11th of July 2022 about the international regulation and supervision of operations using crypto assets. G20 finance ministers and central bank governors will be given a report on regulatory and supervisory approaches to stable coins and other crypto assets in October 2022 (Coin Telegraph). FSB has indicated that one of its goals is to reduce the potential for regulatory arbitrage and market fragmentation.
The recent drop in cryptocurrency prices has gotten the FSB’s attention with regards to crypto regulations. The recent market volatility has brought to light the growing dependence of cryptocurrencies on the established banking systems (FSB). They went on to say that the short-term financing markets and other staples of conventional finance might be adversely affected by this problem.
Cryptocurrency markets worldwide need to be regulated in accordance with the idea of “same activity, same risk, same regulation” (FSB). They added that in order to reach the mainstream of the financial system, a stable coin has to adhere to stringent regulatory and transparency criteria, have reserves that sustain value stability at all times, and fulfill applicable international standards.