A lot has changed in 12 months in Blockchain, with 2022 starting on highs and ending on some of the lowest lows that have been seen in the 14 years since the first genesis block on Bitcoin.
The spectacular human-led collapses of 2022 have given ammunition to crypto-critics and governments are more likely to focus on consumer / investor protection over innovation and jobs in 2023, with anecdotal evidence of Australian entrepreneurs leaving Australia for jurisdictions seeking to provide tech-enabling regulation as a greater focus. What are some of the key dates to look out for in 2033?
Stablecoins
2022 saw US$7.4T of stablecoin trading volumes, up from US$6T in 2021. These figures massively eclipsed the combined volumes of money transacted by credit card giants Mastercard (US$2.2T), American Express (US$1T) and Discover ($200B). Only Visa, with US$12T in volume came out ahead.
With US Congressman Pat Toomey continuing his years long effort to pass stablecoin regulation, and Australian and other regulators considering stablecoin regulation, the landscape of stablecoins is certain to change.
Central Bank Digital Currencies
The number of jurisdictions experimenting with CBDCs is continuing to grow. The Reserve Bank of Australia's CBDC Pilot runs in the first quarter of the year and should showcase a number of innovative uses for a digital Australian dollar. This may be the year that a retail CBDC starts to form in a western nation as a potential stablecoin challenger.
Enforcement
The trial of Sam Bankman-Fried, founder of Alameda Research and FTX, is currently set for 2 October 2023. While many believe he will reach a plea deal and not go to trial, all indications otherwise from Sam have been that he does not believe he committed fraud, but acknowledges poor business decisions. Recently the liquidators have announced that USD$7B of assets have been located, which may leave a customer shortage of around USD$3B (given FTX had ticked the "creditors between USD$1B and USD$10B box on the Chapter 11 form) - which may give some hope to creditors for an ultimate recovery, but that's unlikely to happen this year. Similarly, the prosecution of Alex Mashinsky of Celsius will also continue and that liquidation of Celsius will also be progressing.
Other enforcement actions have been increasing around the world in 2022 and we expect that trend to continue in 2023, particularly as legislations move slowly to regulate the cryptocurrency space. Regulation by enforcement is far from ideal, and risks a chilling effect as start-ups shy away from engaging with regulators for fear of being targeted. Yield products will continue to attract attention and it will be interesting to see if projects which try to fall under existing regulation are subject to higher scrutiny than their traditional competitors or if regulators will view crypto-asset projects using licensing as a positive development.
Regulation
In Australia, a long awaited token-mapping project should see the Treasury identify features of crypto-assets which move them outside of being mere property and into a regulatory perimeter.
Following on from that, CASSPr licensing is expected to become law this year which may cause consolidation in the exchange space for Australia as many exchanges face higher compliance costs. Other jurisdictions will likely move towards mandating custody for crypto-assets to help avoid further risk to customer assets.
NFTs
With sporting bodies and ticketing rapidly moving towards NFTs, we expect further integrations of the physical and digital world with collectible tickets and memorabilia becoming more established as non-fungible tokens and further efficiencies to arise as the foundational technology of blockchain moves into these businesses.
Ethereum
Following the Merge last year, staking withdrawals on Ethereum will be permitted, likely in March, which will represent the next step in the evolution of Ethereum, which already boasts one of the largest developer and user bases of any blockchain.
What's Next?
What will be coming now that DeFi and NFTs have run up and settled down on Ethereum and the failures of 2023 have shown how the mistakes of the centralised world can still be repeated with a crypto flavour remains anyone's guess, but in the fast moving world of crypto only one thing is certain, and that is change.