There’s no denying that 2023 has been somewhat of a rollercoaster ride for the crypto industry, with the first half of the year witnessing several major developments — some positive and some not so much. For example, between February and March alone, a number of prominent American banks servicing the crypto industry faced dissolution.
To start off the year, Silicon Valley Bank (SVB) was faced with a massive bank run (i.e. an event where a large number of customers withdraw their funds simultaneously) after it came to light that the institution had liquidated $21 billion worth of assets to stay afloat. This was followed by the downfall of two other prominent entities, namely Silvergate Bank and Signature Bank, who, too, were faced with withdrawals en masse due to their exposure to the now-defunct cryptocurrency exchange FTX.
Exchanges face heat
Since the beginning of 2023, regulators around the world have been trying to introduce stricter governance protocols for the crypto market, resulting in many prominent players being faced with legal woes. The first big name to be brought under the spotlight was Kraken, with the firm having to settle with the US Securities and Exchange Commission (SEC) for a sizable sum of $30 million due to its unregistered crypto-staking service.
Action was also taken in the form of a Wells Notice against fintech firm Paxos, with the company being asked to halt the issuance of its BUSD stablecoin. Lastly, the SEC recently slapped Binance, the largest exchange in the world by volume, with a total of 13 charges. The allegations range from a lack of transparency to evasion of tax rules, etc. However, the charges have yet to be substantiated.
Adoption soars despite macroeconomic uncertainty
In spite of all the volatility and negative developments surrounding the industry, the crypto market has continued to witness steady adoption. For example, several countries have either launched or expanded on their existing central bank digital currency (CBDC) pilot programs. These efforts include enhancing their current payment services and developing a more integrated financial system.
For example, China recently deployed its popular digital yuan (e-CNY) initiative toward everyday services such as public transport payments and salary remittances. Similarly, the governments of Hong Kong, Colombia, Japan, and Thailand also commenced unique payment and sandbox programs to maximize the potential of these controlled digital assets.
In terms of institutional adoption, BlackRock, the world’s largest asset manager, filed for a spot Bitcoin exchange-traded fund (ETF) on June 15. If approved, the offering has the potential to take Bitcoin even further into the financial mainstream. Similarly, June also saw the launch of a new exchange EDX Markets which is backed by prominent entities such as Citadel Securities, Fidelity Investments, and Charles Schwab.
Within Europe, Germany’s second-largest lender DZ Bank announced during Q1 2023 that it had released a BTC trading desk, a move which was shortly mirrored by another regional giant DWPBank. The latter also released its very own digital asset trading platform, putting Germany at the helm of the ongoing crypto revolution. Across the Atlantic, the Chicago Board Options Exchange (CBOE) received approval from the Commodity and Futures Trading Commission (CFTC) to provide users access to digital assets.
Fidelity Investments also expanded its reach by releasing the Fidelity Crypto platform, previously only accessible to institutions, to enable BTC and ETH trading for retail users. Meanwhile, the Securities and Futures Commission of Hong Kong implemented a new crypto licensing framework, allowing investors to trade digital assets beginning June 1.
However, the most positive development surrounding the crypto market in recent months was a US Judge ruling that XRP is not a security, thereby introducing more clarity toward the regulation of the crypto market as a whole.
A use-case-driven economy
For quite some time now, the total capitalization of crypto has stayed put between $1 – $1.2 trillion. However, despite this apparent stagnation, the industry looks poised to keep growing. This is largely due to the fact that the market is now witnessing the rapid rise of projects offering high-quality use cases. For example, Sweat Economy, a move to earn ecosystem that recently welcomed its Web 3 mobile app – Sweat Wallet – has really piqued the interest of the masses recently thanks to its unique proposition wherein users can earn tangible rewards — in the form of digital assets, gifts, etc — for performing daily activities like walking, running, etc.
The project’s growing dominance is highlighted by the fact that it currently has over 800k+ active on-chain monthly users. Not only that, Sweat Wallet has consistently featured in the top-4 dApp list on DappRadar. Moreover, come September 12th, $SWEAT and Sweat Wallet will be made available to US residents, allowing them to receive their allocations of $SWEAT in proportion to their current sweatcoin (earned on the Web 2 app, Sweatcoin) holdings and start earning more tokens for their daily physical activities.
The future of crypto looks good
A recent survey regarding the future of the digital asset market showed 63.5% of respondents expressing a high degree of optimism over the next 12 months. Not only that, of all the participants who were surveyed, a whopping 88% of them believe that the market will remain extremely bullish over the next decade.
Thus, as the adoption of crypto-enabled technologies continues to garner steam with each passing month, it will be interesting to see how this yet-nascent market will mature and evolve from on out, especially considering the macro uncertainty clouding the global economy.