What does the crypto world have in store for us in 2024? Despite the high-profile failures of companies such as FTX and the looming threat of regulation, there are still many positive developments on the horizon. To get an insight into what these developments may be, PaymentsJournal spoke to James Wester and Joel Hugentobler, cryptocurrency analysts at Javelin Strategy & Research, about their new report 2024 Trends & Predictions: Digital Assets & Crypto.
The two analysts were particularly enthusiastic about the growth of stablecoins, central bank digital currencies, and tokenization of assets.
Stablecoins
The increasing use of stablecoins for transactions in 2020 has left Javelin with a positive outlook for their future. Wester believes that there will be more collaborations between financial institutions and stablecoin providers, and that the most popular stablecoins will be used in a variety of use cases such as cross-border payments, liquidity storage, and accessing the crypto economy. Stablecoins are also becoming increasingly popular as they offer an alternative to debased currencies in emerging markets.
Central Bank Digital Currencies
The idea of central bank digital currencies (CBDCS) is no longer a distant possibility, but something that is being tested and implemented in many countries. This is a huge development, Wester noted, as just a few years ago the concept of digital currencies like Bitcoin was considered science fiction. While there are still many questions to be answered, it is clear that CBDCs will be an important part of the global financial system in the near future.
Tokenized Assets
Tokenized assets are also gaining traction, with many financial institutions beginning to understand how they can benefit from the technology while still maintaining control. This is in contrast to the initial stance of these institutions, which was to push back against tokenization as they saw it as a threat. Going forward, tokenization will only become more popular as it adds efficiency to middle and back offices and creates additional revenue streams.
Regulatory Concerns
The most pressing issue for the crypto industry is regulation. This can affect everything from how an individual investor buys, sells, and holds a cryptocurrency to the governance of smaller meme coins. Wester warned that legislators and regulators have a poor understanding of the industry, and this could lead to ill-informed legislation which would stifle innovation. It is essential, therefore, that those working in the industry educate legislators and regulators, and demonstrate the positive potential of blockchain and digital assets.
