Here we are. 2022 is coming to an end. After crypto FOMO in 2021, the crypto winter has taken place, and it has been a long one. Only a few crypto investors take risks in the market, while most are waiting for the trends in 2023. So let’s look at the crypto market possibilities for 2023.
Web 3.0 will take a more substantial role
The Internet has evolved unstoppably from its earliest days and has more than 5 billion active users, or about 63% of the world's population. We have passed the first era of the internet, so-called ‘the static web’ or web 1.0, where it's built of read-only web pages which mostly lack interactive features.
After web 1.0, we have moved on to web 2.0 (read-write), or the ‘social web.’ Web 2.0 largely democratized online communication via the mass adoption of social media platforms such as Twitter, Youtube, Instagram, Facebook, and more.
Now, the next internet innovation is initiating, and web 3.0 (read-write-own) is decentralizing the internet, allowing individuals to control and own data themself. Web 3.0 incorporates various technologies, including the semantic web, data mining, machine learning, natural language processing, artificial intelligence, the internet of things, and blockchain.
Following the decentralization concept, internet users can conduct peer-to-peer business transactions, cut out intermediaries, and remove power from controlling entities. Undeniably, the blockchain emergence is a key that leads to web 3.0 invention, which also includes non-fungible tokens (NFTs), decentralized finance (DeFi), the metaverse, and decentralized autonomous organizations (DAOs).
Regulation improvement and institutions' appearance
Overall, cryptocurrency regulation has been a critical issue in recent years. The growing adoption and illicit use of crypto assets threatening global financial stability, urged many regulators to take action to close gaps regarding crypto asset regulations. In 2022, there have been significant developments in the field. For instance, in the US, the Office of Foreign Assets Control (OFAC) has increased its crypto-related sanctions under the Specially Designated Nationals and Blocked Persons List (SDN). Indeed, this year, the authority sanctioned two crypto mixers, Bitblender and Tornado Cash, and the largest darknet market Hydra for the first time.
The growing regulatory oversight of crypto assets will very likely continue to grow in 2023, even more, since the FTX crash.
For crypto 2023, it is likely that regulators will take a more closer look at Web3, especially following the hype of DeFi and NFTs. For example, the Japanese government has approved digital transformation policy plans and launched a Web3 office under the Digital Ministry to push web 3.0 adoption.
Then, the International Organization of Securities Commissions (IOSCO), the world's leading securities and futures markets association, has brought together regulators from the most industrialized countries worldwide, including members of the G20, and published the crypto regulatory roadmap 2022-2023. IOSCO has also formed a DeFi Working Group2 in order to focus on understanding the current state of the DeFi marketplace and policy implications.
Similarly, under the Biden framework, several executive agencies are working on modifying new rules and guidance to resolve confusion and eliminate gaps related to applying financial regulations to cryptocurrency. Also, the Biden administration puts more effort into exploring the development of a US Central Bank Digital Currency.
At the European level, modifying MiCA in 2022 will regulate crypto assets in the areas not covered by MiFID II and the European Securities and Markets Authority (ESMA). The EU travel rule will ensure that CASPs can prevent and detect sanctioned addresses and that transfers of crypto-assets are fully identified and traceable as required by the transfer of funds regulation or TFR.
Finally, CBDC projects such as digital euro, dollar, yen, and yuan will be abundant. The actions from big economies drive other countries to get into the circle. According to the CBDCtracker, many countries have started and pushed their research about digital assets and cryptocurrency to take steps further soon.
Signs from big companies
Although critics have tried to invalidate crypto worthiness as an investment by saying it didn't have many use cases, crypto usage is still heating up among major tech companies and financial firms. According to Fidelity Digital Assets, which surveyed over 1,000 institutional money managers across North America, Europe, and Asia, 58% of institutional investors bought cryptocurrency in the first half of 2022, while 74% plan to invest in cryptocurrency. And it looks even more promising for crypto 2023.
During Google’s Cloud Next conference, the company announced that it will rely on Coinbase to start letting some customers pay for cloud services with cryptocurrencies early in 2023. Coinbase said it would draw on Google’s cloud infrastructure. Under this partnership, Google expects to allow customers to make payments with cryptocurrency, including Bitcoin, Bitcoin Cash, Dogecoin, Ethereum, and Litecoin. In addition, Google also introduced a node-hosting service for Web3 developers called the Blockchain Node Engine. The tool is designed to help build and deploy blockchain-based applications and platforms.
Luxury brands are also turning to crypto, including Gucci, Off-White, Equinox, Philipp Plein, and more, entering the sphere to expand their businesses and attract more customers, expecting to be more prevalent in the fashion industry over time.
However, on the other hand, Apple has clarified its guidelines, offering guidance for cryptocurrencies and non-fungible tokens (NFTs) and laying out what apps can do with these technologies. The company has remained relatively quiet on blockchain technologies, and the new guidelines will help developers by screening out what users can and cannot do. Especially the rules surrounding in-app purchases, the company clarifies that, for now, cryptocurrencies can't be used as an alternative payment option.
Crypto assets have been of interest to several major companies. Since businesses can also benefit from blockchain and cryptocurrency, there will be more space for several industries to interact with each other using blockchain technology. For example, the healthcare 5.0 system (Abbas et al., 2022), real estate, and Zero-Knowledge Proof for supporting privacy protection.
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Scorechain provides a blockchain analytics and transaction monitoring platform for crypto assets. As a leader in crypto compliance, the Luxembourgish company has helped over 200 customers in 45 countries since 2015, ranging from cryptocurrency businesses to financial institutions with crypto trading, custody branch, digital assets, customers onboarding, audit and law firms, and some LEAs.
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