Emerging regulatory frameworks, such as the EU’s Markets in Crypto-Assets (MiCA) and Singapore’s Payment Services Act (PSA), are providing much-needed clarity. These regulatory developments are crucial for the growth and adoption of cryptocurrencies and blockchain technology, as they provide clear guidelines and rules for companies and individuals operating in the space.
Historically, private blockchains have been the preferred choice for institutions due to their secure and compliance-friendly nature. These private blockchains have served as secure sandboxes for institutions to experiment with blockchain technology while ensuring regulatory compliance. However, the restricted and siloed nature of private blockchains has limited participation and hindered liquidity in the market. This has led to inefficient price discovery and increased volatility for stable assets.
With the increased regulatory clarity provided by frameworks like MiCA and PSA, decentralized blockchains such as Ethereum and Solana are likely to become more attractive to institutions. Decentralized blockchains offer greater transparency, security, and participation in the market, which can lead to improved liquidity and price discovery. By moving towards decentralized blockchains, institutions can benefit from a more open and efficient market environment while still ensuring compliance with regulatory requirements.
