The crypto market assessment In 2023, Bitcoin (BTC) has increased by more than 100% year to date (YTD) despite global economic concerns.
This year, the number of crypto users reached approximately 575 million. Innovations were plentiful as well, notably in areas such as stablecoins and blockchain-based social media.
While traditional stablecoins like USDT and USDC remained dominant, platforms like friend.tech led the surge in socialfi, ushering in a new era of digital contact.
Crypto major highlights amid the bull market return
The year is coming to a close on a strong note for cryptocurrency. Bitcoin, the largest cryptocurrency by market share, has risen from a low of USD 16.83k earlier this year to a high of USD 43k at the time of writing. It felt the tremors of regulatory worries, leaders stepping down, and war throughout the year. Here are the events that shaped the crypto ecosystem in 2023.
1. Changpeng Zhao’s (CZ) exit as Binances CEO
Members of Congress have recently rekindled their interest in preventing the use of digital for financial crimes. The United States Department of Justice (DOJ) has charged Binance Holdings Ltd., the world’s largest crypto exchange, raising this worry. In November, Binance and its founder, Changpeng Zhao, dubbed “CZ,” pled guilty to money laundering charges and agreed to pay $4.3 billion in fines and settlements.
The exchange, according to Treasury Secretary Janet Yellen, allows “illicit actors to transact freely, supporting activities ranging from child sexual abuse to illegal narcotics to terrorism, across more than 100,000 transactions.”
Binance’s plea further proves that digital assets’ “Wild West” days are ending. Investors may now want to consider other areas where better compliance with anti-money laundering legislation, such as stablecoins, could be enforced.
While Richard Teng takes over at Binance, analysts are optimistic that the industry is maturing and prioritizing rules and compliance.
2. Sam Bankman-Fried guilty ruling
Last year, FTX CEO Sam Bankman-Fried was heralded as the crypto industry’s wunderkind and possibly the world’s first trillionaire. However, he is now awaiting sentencing after being found guilty of fraud and conspiracy for his role in the misuse of customer funds at his exchange.
While SBF may be getting his fair share, the reality is that many FTX consumers have been burned and may never be made whole. Even though FTX aims to restore 90% of recovered assets to customers, depositors will not receive the full value of cash held on the exchange at the time of its demise. This is because not all assets will be recovered, and those depositors will miss out on this year’s bull rally.
The entire FTX fiasco serves as a sharp reminder that many of the benefits of the DeFi industry are lost when users do not own their private keys. Whether cryptocurrency users will take self-custody more seriously in the future remains to be seen.
3. BlackRock venture into crypto with a BTC ETF filing
Bitcoin’s price has rebounded dramatically from its lows in late 2022, and much of the newfound interest in the digital asset is due to the possibility of at least one spot Bitcoin ETF being approved by early next year.
While futures-based Bitcoin ETFs are already available, multiple applications for spot Bitcoin ETFs have been rejected in the past. In June, the entry of BlackRock into the spot bitcoin ETF sector changed everything.
BlackRock’s ETF filing was viewed as a significant step forward for crypto. The business is one of the world’s largest asset managers and might lend credibility to the DeFi industry. After BlackRock entered the race, other industry titans like Fidelity redoubled their efforts to launch their own spot ETF offerings.
The approval of a spot Bitcoin ETF would be a watershed point in the crypto asset’s regulatory and trustworthiness. According to experts, a spot Bitcoin ETF might bring tens of billions of dollars into the Bitcoin market in a few of years.
The Securities and Exchange Commission (SEC) currently has until January 10 to make a decision on Ark Invest’s ARK 21Shares Bitcoin ETF.
4. SEC’s intensified crypto crackdown
The SEC sued Binance in June for running an unregistered securities exchange, as did Coinbase in June and Kraken in November.
The move against Coinbase was especially notable because the business has consistently emphasized its willingness to collaborate with US regulators and follow the rules. Regardless of Coinbase’s objectives, the exchange has listed assets that the SEC classifies as securities.
Coinbase CEO Brian Armstrong stated in April that if Congress and regulators did not provide better clarification on crypto rules in the coming years, he would consider transferring the exchange. Even federal officials, such as Commodity Futures Trading Commission Chair Rostin Behnam, have stated that the United States’ regulatory system need clarification.
5. Crypto’s trace to the Israel-Hamas war
October 7th marked the beginning of a dark chapter in history. The conflict between Israel and Hamas-led Palestinian militant organizations over the Gaza Strip continues to this day. According to the Wall Street Journal, Hamas’s strikes on Israeli territory were sponsored by cryptocurrency.
Between August 2021 and June 2023, three extremist groups in the region, Hamas, Palestinian Islamic Jihad (PIJ), and Hezbollah, were alleged to have received USD 93 million in crypto coins. As reported, digital assets were used to fuel the Ukraine-Russia conflict.
On the other hand, digital assets have played a role in humanitarian fundraising for those affected in the regions.
6. Heavy focus on crypto regulation
The G20 Finance Ministers also endorsed the G20 Roadmap for Crypto Assets. In April, Indian Foreign Minister Nirmala Sitharaman stated that India’s G20 presidency seeks to build a uniform framework for all governments to deal with cryptocurrency’ concerns.
In October, the G20 finance ministers endorsed the IMF-Financial Stability Board (FSB) synthesis document, which proposed crypto restrictions.
7. Do Kwon’s fate
Do Kwon’s trial in 2023, the former CEO of Terraform Labs, became a crucial event in the market. Do Kwon was arrested and sentenced to four months in prison in Montenegro for using counterfeit passports. He and Terraform Labs’ former finance officer, Han Chang-joon, were apprehended as they sought to board a flight to Dubai.
Montenegrin authorities discovered doctored Costa Rican passports, a different set of Belgian passports, laptop computers, and other equipment in their luggage.
This move came after the collapse of the stablecoin TerraUSD in May 2022, which had a tremendous impact on the crypto markets.
The Montenegrin trial was part of a larger sequence of legal battles for Do Kwon. In addition to the accusations in Montenegro, he was charged with securities fraud, wire fraud, commodities fraud, and conspiracy in the United States.
Following the completion of his jail sentence for document fabrication, the Montenegrin court’s decision on extradition, whether to South Korea or the United States, remains a pending matter.
Do Kwon’s legal issue and its repercussions highlight the importance of compliance and transparency in the crypto industry, a theme that has become increasingly prominent in the crypto sector’s year in review.
