29 November 2023
Regulation of the rapidly developing Crypto and Web3 business couldn't be longer rely only on punitive measures as the sector develops and matures. DeFi is a phrase for a number of monetary offerings which could indeed be performed without the organizational middlemen of the traditional finance world, and the industry should move toward a regulatory and legislative framework that recognizes the potential and importance of digital currencies and applications like this. Let's investigate the reasons why the Web3 industry needs tougher regulation of centralized Crypto players in 2023 and the necessity for increased decentralization in general.
Insightful reporting from JP Morgan previous year pinpointed centralized players as the reason for Crypto exchange FTX's demise in 2022. The financial behemoth went on to say that central Crypto players, rather than decentralized protocols, are to blame for the recent falls in the Cryptocurrency market. In light of this, the Web3 sector throughout the globe anticipates a speeding up of Crypto legislation in various countries in 2023. Moreover, it advocates for the development as well as widespread use of decentralized technology in order to provide safer but more trustworthy means of exchanging and managing virtual currencies.
Web3 regulation has advantages for users and "investors," as well as for Crypto players including wallet suppliers, platforms, coin holders, as well as Decentralized Finance (DeFi) firms, even if some Crypto users say that regulation ruins the core decentralization of Web3. Let's take a closer look at how a strong collection of guidelines tailored to Web3 as well as the Cryptocurrency industry may help consumers and businesses. A completely decentralized protocol would be unthinkable from a regulatory perspective, but it is. That's the reason where Web3 advocates in India and elsewhere aren't calling for centralized network oversight.
Web3 regulation has advantages for consumers as well as "investors," as well as for Crypto players including wallet suppliers, platforms, coin holders, as well as Decentralized Finance (DeFi) firms, even if some Crypto users say that regulation ruins the core decentralization of Web3. Let's take a closer look at how a strong collection of guidelines tailored to Web3 as well as the Cryptocurrency industry may help consumers and businesses. A completely decentralized protocol would be unthinkable from a regulatory perspective, but it is. That's the reason where Web3 advocates in India and elsewhere aren't calling for centralized network oversight.
Decline in FTX to Scrutinize Unstable Market
FTX Trading Limited is an international trading company established in 2017 with its registered office in the Bahamas and incorporation in Antigua and Barbuda. Sam Bankman-Fried, who went on to become the organization's CEO, as well as Gary Wang, who took on the role of CTO, were the company's two original founders. The company boasted more than 1.2 million customers by early 2021 on its Cryptocurrency derivatives exchange and trading platform, FTX.com. FTX is a Crypto market that was valued at $32 billion after raising $400 million in a series C fundraising round in January. The FTX coin, FTT, was worth $14 billion in March.
In the Cryptocurrency market, FTX was widely considered to be the second biggest exchange, after a colossal Binance Holdings Ltd. According to projections made by the Indian Web3 sector in a 2021 research by NASSCOM on Cryptotech, more than 800,000 new employment may be produced by 2030. However, the absence of forward-thinking legislative talks may have dire consequences for India, including the departure of skilled workers and investment dollars, as well as the disappearance of Web3 innovations with an Indian focus. Regrettably, Crypto trading is now the only use case considered in the policy narrative around Web3.
Uptake of Decentralized and Web3
Considering the market slump, the push for accessible UX and widespread adoption of Web3 will remain, says Aniket Jindal, Co-founder of Biconomy. Funds for people as well as projects will be ring-fenced with a focus on self-custody, guardrails for authentication, and more complex governance for Web3 financial activities. Whoever has the most resilient infrastructure comes 2023. Ethereum's move from the energy-hungry PoW consensus mechanism to the 99% greater energy-efficient Proof of Stake system would be another significant determinant for Web3 acceptance.
The Ether update was indeed a big breakthrough in the Cryptocurrency sector since it improved the blockchain's scalability, security, and longevity and so allowed for the creation of more powerful dapps. In fact, Web3 technology may still find a niche in the Metaverse, despite the uproar caused by Facebook's renaming to Meta in late 2021 and the anticipated adoption of Metaverse technology in 2022 fizzled out.
The growth of Web3 in the Metaverse is something that many people want to see in the next year. Tokenized items, online personas, digital retail storefronts, virtual concerts, music NFTs, etc. are all examples of how big Web2 enterprises are using NFTs and DeFi in order to expand their operations into the Metaverse. When Cryptocurrency is deployed in a platform, decentralized protocol, or Metaverse application, the largest challenge for governments going ahead will be enforcing any Crypto policy frameworks.
Disclaimer: The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice.