Digital Asset Outlook 2022
2022 Thematic Snapshot
2022 Snapshots
Theme 6: Regulation and Institutionalization in 2022 ▪
Regulators and centralized institutions worldwide are catching up, given the rapid evolution of the digital asset sector. Specific areas ripe for regulations include stablecoins, centralized exchanges and security tokens.
▪
Regulatory clarity and institutional-grade infrastructure are the strategic elements that pave the way for institutional digital asset adoption, which will shape the operating and product environment.
▪
Long term relative risk-reward of digital assets will gradually trend down as the market environment matures.
Core thesis
168bn Total stablecoins market cap (US$, 17/1/2022)
The institutionalization of digital assets is a long-term secular trend, driven by the virtuous cycle of network effects. ‘Legitimized’ by regulations and institutional demand, it has become more acceptable to treat digital assets as an asset class. Regulatory clarity and institutional-grade infrastructure are the strategic elements that pave the way for institutional digital asset adoption.
Significance and Disruptive Impacts Global digital asset regulations will pick up in 2022, with the entry of the traditional financial institutions and competitive pressures worldwide. This, in turn, will increase the urgency for institutional-grade infrastructure and solutions.
63
bn
Institutional crypto AUM, YE2021 (US$)
In addition, jurisdictional differences and the fragmented global regulatory landscape for digital assets inevitably give rise to regulatory arbitrage opportunities.
Expectation for 2022 1.
Regulation begets legitimacy The digital asset space will face a tighter regulatory environment in 2022. A consistent regulatory framework will pave the way for mass adoption. Specific areas ripe for regulations include stablecoins, centralized exchanges and security tokens. (See Interview with Daniel Lai, Crypto.com, Interview with
Kevin Loo, New Vision, Interview with Bowie Lau, True Global Ventures)
2.
87 Number of countries exploring a CBDC
Institutional and government access reshape operating and product environment If 2021 was the year that governments and institutions strategized their entry into digital assets, 2022 is when they will take decisive action. We expect more countries to integrate digital assets into their financial systems (at varying degrees), which will reshape the product and operating environment. (See Interview with Gordon Crosbie-Walsh, EquitiesFirst, Interview with Ben Caselin,
27
