Regulation
Crypto Payment Rails and Regulatory Clarity
As Nathaniel Hawthorne wrote in the 1800s, “families experience constant growth and decline in America.”
And the same goes for cryptocurrency and the Web3 space in 2024.
Indeed, whether it is the market valuation of the sector, the education and acceptance of Web3 technologies, or even the promised land of scalable usability, the passage from a distance without link of dependence with cryptography to a potential adoption of blockchain-based solutions has had its way. much of the ups and downs in the decade and a half since bitcoin first appeared on the scene in 2009.
But while awareness, acceptance, and adoption are all crucial to driving the evolution of cryptocurrency, it is two other critical factors that will determine crypto’s success: its ease of use and its usefulness, particularly in payment ecosystems.
Underlying both of these factors, of course, is the elephant in the room of establishing a productive regulatory framework to govern Web3.
This is because last week brought a basket of news showing that the ice around crypto regulation and usage issues is potentially melting. That’s why, from legal proceedings to fundraising to payments use cases and beyond, here are the top news stories from the Web3 landscape that PYMNTS has been tracking over the past week.
Learn more: Making sense of the state of crypto in 2024
The digital assets sector is heading to Washington
The crypto community plays politics to win, with a 440,000-member strong nonprofit group. Stick with crypto reportedly formed a political action committee (PAC) to support candidates who are cryptocurrency friendly and blockchain.
The new PAC aims to raise money from Stand With Crypto’s nearly half a million members, and it comes against a backdrop where the crypto industry super PAC have become one of the top three fundraisers in the 2024 election cycle.
The crypto industry is hoping that a friendlier and more educated group of lawmakers can finally pass a regulatory framework for cryptocurrencies.
And on Friday, May 10, that goal moved closer to the finish line, with a bill that promises regulatory clarity for digital assets has moved one step closer to a vote in the United States House of Representatives.
THE House Committee on Rules said on Friday that it would examine the Financial Innovation and Technology for the 21st Century Act (FIT21) (HR 4763), meaning the bill could come up for a floor vote later in May, on House Financial Services Committee said.
FIT21 would delineate when a cryptocurrency is a commodity or security and allocates oversight appropriately between the CFTC and the SEC.
But that wasn’t the only legal news on Web3 this week. As it prepares to go public, stablecoin issuer Circle would also intend to transfer its legal base from Ireland to the United States, as reported Wednesday (May 15).
While on Monday May 13, US President Biden issued an order blocking a Chinese-backed cryptocurrency mining company to own land near a US nuclear missile base, citing the mining company’s proximity to the military base as a “national security risk.”
After all, crypto has its dangers. North Korea laundered $147.5 million via virtual currency platform Tornado Cash in March after having it stolen last year from a cryptocurrency exchange, according to a report published Tuesday (May 14).
Checking the pulse in the crypto market
“It is important to know that crypto is not just bitcoin and Doge and NFT”, Sheraz Shereresponsible for payments at Solana Foundation, told PYMNTS on Monday. “…Blockchains are truly alternative pathways for payments and financial assets.”
“There are a lot of misconceptions among those in the financial services industry regarding compliance and regulation, and they think they wouldn’t want to touch blockchain with a 10-foot pole,” Shere added. “And I think in the past that may have been true, but now there’s a whole new set of protocol-level controls that provide even finer control than you often have with traditional financial rails.”
In conversation with PYMNTS, he highlighted the need for crypto players and businesses to focus on real-world use cases, such as cross-border payments, where blockchain solutions offer advantages over traditional systems .
Another blockchain use case being experimented with is the use of its immutable ledger to record and store digital identities. Humanity Protocol, a startup that aims to verify people’s online identities using scans of their palms, raised $30 million at a $1 billion valuation, per Wednesday. report.
Yet for the everyday retail investor, Bitcoin’s recent price surge has crypto wallet recovery companies’ phones “ringing off the hook,” according to a report released Thursday. reportas investors locked out of their Web3 portfolios try to regain access and capture the rise in the market.
The market surge is leading to a wave of new coins, as there have been almost a million new crypto tokens. created over the past month, a number equivalent to 2 times the total number ever on Ethereum from 2015 to 2023.
And the PYMNTS written in March on how representatives of fraudulent companies claiming to provide cryptocurrency tracing and promising to be able to recover lost funds are turning to social media and other messaging platforms to contact victims directly to resolve their lost assets .
These collection scammers charge an upfront fee and either stop all communication with the victim after receiving an initial deposit or produce an incomplete or inaccurate tracing report and charge additional fees to recover the funds. Scammers may pretend to be affiliated with law enforcement or legal services to appear legitimate.
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