Anndy Lian is an all-rounded business strategist in Asia. He has provided advisory across a variety of industries for local, international, public listed companies and governments. He is an early blockchain adopter and experienced serial entrepreneur, book author, investor, board member and keynote speaker. Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. He is also the Chairman, Asia for BigONE Exchange.
Being an Asian, I would like to hear Anndy’s perspectives on how he sees cryptocurrency adoption for 2022.
Jenny Zheng: Now that the SEC appears to have dropped its resistance to (certain) Bitcoin ETFs, do you expect we'll see increased institutional adoption of bitcoin/crypto as an investment vehicle and/or inflation hedge?
Anndy Lian: It's certainly welcome news to exchange-traded fund managers with the launch of the first Bitcoin futures ETF this week, with the ProShares’ Bitcoin Strategy ETF, to first and foremost provide their clients with the option to diversify their portfolio with cryptocurrencies, a testament to the maturation of the market.
Plus, the news that Interactive Brokers announced they will empower Registered Investment Advisors across the United States to invest in bitcoin and cryptocurrencies means hundreds of billions of dollars can now enter the market more easily.
It's true that big institutional investors have been looking for a regulated way to trade Bitcoin for a while, and that's all the more so considering the real concerns about high inflation, and the debasement of the dollar due to the US Fed's quantitative easing program.
Part of that crypto adoption process however is being able to convince the regulator, the SEC in the US being the prime example, that proposed funds will be able to cover the risks for investors. For example, Bitwise, which originally filed for regulatory approval for a bitcoin ETF in 2019 before withdrawing the application after an initial rejection, has been revising its filing for more than a year.
But it's also clear that since the recent Chinese mining and crypto ban the US has become a little more receptive to crypto regulation. Certainly, regulators in other countries have approved ETFs, Canada’s Purpose Bitcoin ETF, which started trading in February, ballooned to more than $1bn in assets under management in less than two months.
Jenny Zheng: 2021 was notable for witnessing El Salvador's adoption of bitcoin as legal tender. To what extent do you think 2022 will involve more nations following such an example, or will at least involve more nations/governments using crypto in various ways?
Anndy Lian: The rollout of Bitcoin in El Salvador certainly captured the headlines worldwide, It raised the profile of the country and has no doubt attracted the attention of other countries. By the same token, the speed at which it happened, without the opportunity to enlighten citizens across the country as to the pros and cons of using the cryptocurrency will also have given them food for thought. This caution is supported by the case of Panama, which while also passing a law to increase the use of bitcoin and Ethereum as a payment option did not decree that businesses had to accept cryptocurrency.
In 2022 however, the real crypto push from governments will be more likely to come in the form of central bank digital currencies, most notably in China. There the central bank is looking to use blockchain at the issuance layer for its digital yuan system, which is centralized. The Chinese version of the CBDC is not yet a distributed approach due to issues around performance and scalability; though the wider ecosystem does provide solutions in the form of sidechains and oracles to enable off-chain data to connect with blockchains this seems unlikely to be adopted any time soon.
However, the real impetus to action by the government whether in South America or Southeast Asia may come with the rollout of Facebook's Novi wallet later this year, with the Diem cryptocurrency to follow shortly after. The reason being that most deserving of crypto aims, to service the ‘unbanked’ citizens who lack banking services. If the Facebook initiatives take off then this could spur governments to action, if not creating their own digital currency, in supporting the growth of private-sector solutions with improved regulations and support.
A good example of this approach is in Ukraine, which voted almost unanimously to legalize and regulate cryptocurrency just a day after El Salvador’s official bitcoin adoption. As reported in Yahoo Finance: "This is with hopes of developing a new industry that will attract transparent investments and boost the country’s reputation as a high-tech state.” No doubt this model for adoption will prove attractive to other governments in 2022.
Jenny Zheng: Lastly, the end of 2021 seems primed to witness a renewed bull market. However, do you think 2022 will witness an increase in people actually using bitcoin and cryptocurrency to make payments?
Anndy Lian: The trend towards greater use of crypto for payments has already started, with the recent news in the US that US-based cinema chain AMC will soon be accepting cryptocurrency payments. It comes just a few months after PayPal decided to allow US consumers to use crypto to make purchases and news that Mastercard would be supporting cryptocurrency payments across its network.
While in the retail sector, Walmart and Amazon's crypto recruitment announcements have raised awareness that these retail behemoths may be planning to open their doors to cryptocurrencies. At Amazon, it appears the plans are well advanced, as a "full-on, well-discussed, integral part of the future mechanism of how Amazon will work," according to a City AM report.
While there are certainly challenges in accepting Bitcoin for payments, especially when the price volatility is factored in, more and more merchants are looking to add crypto purchasing to their business. According to a survey last year by BitPay, “up to 40% of customers that pay with crypto are new to the merchant. Second, purchase amounts are twice that of credit card purchases. Third, crypto is less expensive than credit cards, and lastly, there are no fraud-related chargebacks”.
A clear use case for cryptocurrency also comes with international money transfers, for example, with low transfer fees and fast transfer speeds, and anyone can use it. “However, Bitcoin has become less attractive for remittances due to the increasing cost of Bitcoin transactions. Some competing cryptocurrencies, such as Ripple and Dash, are also targeting the remittance market with substantially lower fees,” suggested a recent report in Investopedia.
Jenny Zheng: Any final words?
Anndy Lian: Well, the year 2022 seems to be the best year for cryptocurrency adoption. If you looked at the crypto innovation curve that I have shared on Twitter. You have not missed anything. Crypto is still young.