At the beginning of the massive adoption of cryptocurrency
In today’s article, we will discuss the areas of life with the most cryptocurrency impact to date. Why crypto philanthropy is on the rise, and why stablecoins are causing dilemmas for regulators? Let’s find the answers.
Relevant in 2021: what are the areas of life with the wide use of cryptocurrency but you didn’t see it?
Cryptocurrency is already presented in many areas of our life. Companies introducing and using cryptocurrency wallets more active. Non-standard methods of using cryptocurrency (for example, in marketing) are also more common. Cryptocurrency also has every chance of gaining a foothold in e-commerce. Cryptocurrency payments are already being used by airlines, restaurants, online stores, and even educational schools.
Virtual assets like Bitcoin or Ethereum are strong financial instruments for transferring funds. They are decentralized so that buyers and sellers can exchange money with each other directly without interacting with banks. Additional commissions are also excluded. Therefore, it should come as no surprise that both merchants and consumers are opting for crypto as a cheaper and more efficient payment solution.
However, their use still requires a lot of time, because the speed of execution of operations on the blockchain is still low. However, changes are coming soon, as there is a strong demand to increase the system speed.
The rise of crypto philanthropy
Crypto charity has been developing more actively for the last 4 years. This is happening especially against the backdrop of the bullish growth of cryptocurrencies in recent months. For example, this month, two unrelated cryptocurrency projects Elongate and Munch (DeFi) have collectively raised over $ 3 million in charitable contributions.
The Elongate cryptocurrency project has raised a total of $ 2 million for various food and general support programs. Its most recent crypto donation was aid to South Asian countries in the aftermath of a devastating surge in new infections. Elongate is one of the largest sponsors of the following organizations: Children International, Action Against Hunger, The Ocean Cleanup, Big Green, Human Relief Foundation and Give India, among others.
At the same time, the DeFi Munch project raised over $ 1 million to help developing countries for various purposes through the GiveWell Maximum Impact Fund. Charity GiveWell has donated tens of millions of dollars over the years to fight malaria and other diseases in Africa.
And in late April, The Giving Block, a leading cryptocurrency donation platform, launched a new initiative with the stated goal of making cryptocurrency the most charitable industry in the world.
So why is crypto charity growing?
The growth in crypto donations shows a strong trust factor. It is becoming apparent that crypto is characterized by transparency, immutability, and traceability. These are the very qualities that charitable organizations need to work effectively.
Also, more and more options for using cryptocurrencies are being created, which strengthens their position in the financial world. Cryptocurrency owners are more often millennials and younger people who have already begun to massively enter the labor market. It is logical that when 20% of millennials own cryptocurrency, it worries them because they are always in search of new and new sponsors.
Thus, charitable foundations and organizations want to build long-term and trusting relationships with young people from twenty to thirty years old, because it is promising.
Why are stablecoins causing dilemmas for regulators?
To begin with, the very definition of stablecoins is controversial.
On the one hand, stablecoins aren’t a single category. They are a collection of crypto instruments with potentially large differences in legal, technical, functional, and economic aspects. On the other hand, stablecoins are similar in purpose. They are designed to maintain a stable value against a specified currency, asset, or pool of such currencies/assets.
They contrast with conventional cryptocurrencies without a stability mechanism and the risks of significant fluctuations in value.
Regulatory attention to stablecoins. Stablecoins have not received much attention since their inception in 2014 and the subsequent rise in importance. But that all changed with the creation of Facebook’s Libra project.
Almost immediately, many financial authorities around the world, including the Financial Stability Board, the European Central Bank, the Bank of England, the US Federal Reserve, and the US House of Representatives Financial Services Committee, issued Libra statements collectively expressing caution and concern strong potential risks.
Regulators around the world understand the importance of stablecoins to the future digital economy. They strive to ensure adequate regulation, support innovation, taking into account potential risks.
Stablecoins and the USA. In the United States, the Office of the Comptroller has been heavily involved in the debate, publishing several explanatory letters about digital assets. In each of the letters, the management expanded the possibilities for the use of stablecoins by financial institutions. Finally, the latest letter, issued in January 2021, effectively granted permission for national banks and federal savings associations to participate as nodes in independent node verification networks (a distributed ledger is a common form) and use stablecoins to facilitate payment transactions and other functions.
On the other hand, back in December 2020, the draft Law on the pegging of stablecoins and compulsory licensing of banks (STABLE) was published. It suggests strengthening regulatory oversight of stablecoins: all stablecoin issuers must have a banking charter, multiple federal agency licenses, and comply with banking regulations.
Thus, stablecoins as an asset do not guarantee stability, which depends on specific design features and governance mechanisms. Today we are seeing polarizing actions from regulators. Restrictive measures go hand in hand with approving decrees.
Cryptocurrency is firmly entrenched in everyday life. You can use digital assets to buy a plane ticket, buy a painting or product in an online store, or pay for your lunch at a fast-food restaurant. People can also donate their crypto assets to charity.
Even regulators are largely recognizing their perspective. However, for widespread implementation and use, it requires reliable security guarantees. Therefore, ongoing monitoring by regulatory authorities around the world is largely focused on the study and finding of potential risks.