• 2021 was the “Year of the Cryptocurrency,” but 2022 saw its collapse.
• 2023 will see the natural selection of the crypto ecosystem, regulation across the world, the metaverse and NFTs coming back from the dead, and institutional investments in the digital economy skyrocketing.
• In the US, no meaningful regulatory movements will occur due to legislative dysfunction.
2021 was a wild year for the crypto market, with massive gains and losses for investors across the world. It was dubbed the “Year of the Cryptocurrency,” but as we welcomed in 2022, the market saw a dramatic collapse. Now, 2023 is just around the corner and it is time to look ahead to the coming year in the digital economy.
The natural selection of the crypto ecosystem will be a powerful force in 2023. The companies that have been well-managed and have had the right intentions will survive and become stronger, while the ones that have had fraud, incompetence, or lack of experience will fade away or be restructured. This reshaping of the industry’s reputation and the way it does business will be driven by institutional investors requiring more controls, risk management, transparency, and reality checks.
Regulations on the crypto market will be taking shape across the world in 2023. The European Union will vote on and implement the Markets in Crypto-Assets Regulation (MiCAR/MiCA), which lays out a framework to regulate both the issuance of cryptocurrencies and assets, as well as transactions (i.e., trading, investment and payments). Meanwhile, Asian regulators are each taking on crypto guardrails differently. In Hong Kong, the goal for 2023 is to increase retail access to crypto, while Singapore has signaled that it will tighten regulations after big losses this year for investors. South Korea, still dealing with the aftermath of the collapse of Terra, will focus solely on enforcement, and India is using tax policy to drive behavior.
The metaverse and non-fungible tokens (NFTs) have seen their share of glitz and glamor, but 2023 will mark the beginning of how we perceive “metaverse experiences.” New use cases in enterprise, healthcare, education and more will bring the practical utility of the metaverse to our collective attention, even in our daily lives. Advances in identity technology, along with AR/VR devices, will come into focus as well in 2023. As for NFTs, the market will go through a rebirth of sorts in 2023, moving away from its current state and closer to being a digital proof of provenance and authenticity of an object, with its value deriving only from what it represents. NFTs will also have a more pervasive and permanent role in digitizing operations in industries such as supply chain and logistics, healthcare, real estate, and retail.
2023 may be the “Year of the CBDC” around the world, as central banks create alliances with commercial banks and technology providers to strengthen their position to test, launch, and execute their unique CBDC strategies. Already, China’s digital yuan is far beyond the rest, and many countries are making headway, with 2023 goals of rollout a possibility. Turkey announced it would launch its CBDC next year, while the ECB intends to start work to develop a rulebook in early 2023 on rolling out a digital euro.
Institutional investors will make big moves with their big money in 2023. Depending on the world economic sentiment, we may see an uplift in crypto prices as well as investments in the digital asset market. More traditional, blue chip funds will tokenize, making them more accessible to a broader sphere of investors. Additionally, more and more large cap market players will move into the tokenization space, and we’ll see a significant uptick in mergers and acquisitions activity as a result.
2023 promises to be an interesting year in the crypto market, with natural selection of the crypto ecosystem, regulation across the world, the metaverse and NFTs coming back from the dead, and institutional investments in the digital economy skyrocketing. While the US will likely not see any meaningful regulatory movements due to legislative dysfunction, the rest of the world will move forward in their respective strategies for the crypto market.