Cryptocurrencies have had spectacular growth in the past decade. Today, there are more than 11,000 cryptocurrencies that have a combined market capitalization of more than $2 trillion. Many retail and institutional investors have also bought Bitcoin and other digital currencies. In this article, we will look at the state of the crypto industry in the US.
Cryptocurrency regulations in the US
Cryptocurrency believers and critics believe that regulations are necessary for the industry. These regulations will help to protect companies dealing with cryptocurrencies and ordinary traders and investors.
However, the US has been relatively late in regulating these currencies. For example, there has been a challenge about the agency that should regulate the different types of blockchain projects. The Commodity Futures Trading Commission (CFTC) believes that it should regulate some forms of cryptocurrencies.
The Securities and Exchange Commission (SEC) has also asked Congress for more authority to regulate the industry. At the same time, executives in the cryptocurrencies industry have called for the creation of a separate agency that will oversee the industry.
Still, the lack of clarity of regulations has had a mixed outcome. On the one hand, it has left many institutional investors on the sidelines. Indeed, many of the country’s biggest investors like Blackrock and Vanguard have stayed away from the industry citing regulatory issues.
At the same time, it has helped to make the US one of the biggest players in various parts of the industry. For example, the US has become the global leader in Bitcoin mining after China outlawed the practice.
The US is also home to some of the biggest blockchain companies in the world. For example, Coinbase, the second-biggest exchange in the world, is headquartered in the country. Other leading blockchain companies in the country are Gemini, Ripple Labs, Solana, and FTX among others.
Cryptocurrency ownership in the US
The recent rally of cryptocurrency prices has pushed more people to the cryptocurrency industry. A recent study by Pew Research said that about 16% of American adults have invested in cryptocurrencies. A separate report by NORC said that about 1 in 10 Americans have invested or traded cryptocurrencies.
This trend is evidenced by the significant growth of companies that offer these services. For example, a company like Coinbase has more than 73 million users. Most of these users are from the United States. Gemini, which is primarily an American company, has more than 13 million customers.
At the same time, many people buy cryptocurrencies using wallets like PayPal, Venmo, and Cash App. Indeed, for years, Square’s Cash App most profitable product has been its cryptocurrency offerings. For example, in January, Square reported that about 1 million users bought Bitcoin using its Cash App product. The company’s crypto revenue in 2020 rose to more than $4.5 billion.
There are other ways in which Americans are buying cryptocurrencies. One of the most common of these platforms is Robinhood. Robinhood is a brokerage company that pioneered commission-free trading. The company allows users to buy coins like Bitcoin, Ethereum, and Bitcoin Cash. There are many other companies that let users buy Bitcoin in the USA.
The future of cryptocurrencies in the US
The US is relatively different from other countries like China and India. Unlike China, it is relatively difficult for the government to ban cryptocurrencies or companies in the industry. That is because any attempt to do that would be met with prolonged court action. Courts would likely overturn such action.
Also, the country’s regulators and politicians believe that banning cryptocurrencies or adding significant regulations will erode the country’s innovative edge. Indeed, many regulators believe that creating an economic enabling environment will lead the US to become a global leader in the industry. Just as it did with technology.
Still, there is a likelihood that policymakers will add more regulations in a bid to protect investors and other users. Experts believe that several areas need tough regulations. For example, the decentralized finance industry (DeFi) needs regulations to protect users from unscrupulous dealers.
Another industry that has been focused on is stablecoins. A stablecoin is a cryptocurrency that is backed by real assets like gold and the US dollar. The most popular stablecoins are USD Coin, Tether, and Binance USD. Analysts believe that the opaque nature of the industry poses significant risks to the market. For example, it has been reported that Tether’s assets are not backed by US dollar 100%.
The US has become one of the most important countries in terms of cryptocurrencies. The country has millions of cryptocurrency users and some of the biggest companies in the industry. This trend will likely continue in the coming years. Regulations will most likely help the industry by bringing moneyed investors into the industry.