Crypto investors have poured $135 million into Donald Trump's campaign and his congressional allies, seeking a 'crypto utopia.' However, the global financial system isn't rushing to accommodate their dreams.
European Regulation and Its Impact on Investment
In Europe, regulations for stablecoins are tightening. Starting December 30, 2024, new rules require stablecoins like Tether's USDT to hold 60% of their reserves in traditional banks. According to Tether CEO Paolo Ardoino, this could lead to 'incredibly big systemic risk.' Failing to comply means stablecoins might lose European investors. Meanwhile, banks are ready to launch their stablecoin-like products with the regulatory backing to do so. The EU aims to keep financial control firmly in the hands of traditional institutions.
Asia's Blockchain Battle: Centralization vs Decentralization
Asia has a different game plan. In China, centralization is the name of the game, focusing on control over decentralization. Programs like mBridge are designed to challenge US dollar dominance. mBridge is a cross-border payment system that allows central banks to exchange digital currencies without SWIFT involvement. It's a direct challenge to the US financial system, with countries like Thailand, Hong Kong, Russia, and Saudi Arabia on board. If mBridge gains traction, it might tip the global financial balance.
Tokenization: The Future of the Global Market
Asian countries are vigorously pursuing tokenization, the process of turning assets into tradable tokens. Citigroup forecasts that the tokenization market could reach $4 trillion by 2030. Hong Kong is tokenizing everything from green bonds to EV charging stations, while Singapore is rewriting financial services with smart contracts. Central Bank Digital Currencies (CBDCs) are starting to lose their appeal. A 2024 survey found that only 13% of central banks view CBDCs as the future of cross-border payments, down from 31% the previous year.
The future of cryptocurrency depends on various factors, including political dynamics and global financial innovations. Trump promises support to crypto enthusiasts, but the world is rapidly changing, and nothing is certain.
