In 2023, the most important achievement in the world of crypto assets (virtual currency) and blockchain was bringing the bad guys to justice. In November 2022, the biggest fraud in crypto history was uncovered (well done CoinDesk!) and many were worried that those responsible would not be held accountable. More than a few people I know thought the money given to politicians would work, but it didn’t.
Fast-forward to December 2023, and convictions, settlements, and record fines for bad actors pile up. Many people will spend some time in prison for stealing or misusing customers’ money or violating other laws.
This may seem basic, but it is extremely important in laying the foundation for a better future. Although you may have never experienced it before, it is very difficult to compete with fraudulent companies. Because they promise things you can’t do. Have you ever tried to sell regulatory compliance or audit services to a company whose management was committing fraud? They always seem to have a reason why they’re not ready to invest in it yet.
The judiciary is also important for consumer confidence. Although the crypto asset market has increased significantly in value, the trading volume is much lower than in the past. Restoring confidence in the offerings of crypto exchanges, which are the main consumer entry points into the overall market and ecosystem, will be particularly important.
Pursuit of justice aside, few will look back on 2023 as a pivotal year in blockchain history. Not because nothing important happened, but because something really important happened and was largely invisible.
Historians may say Ethereum’s victory occurred at the 2022 “merge.” But in reality, it was the culmination of many years of work. What’s more, in 2023, it took everyone a lot of time to really absorb it and adapt to this new environment. Ethereum’s Layer 2 traffic has exploded and now exceeds Layer 1 traffic. Ethereum may have officially been the big winner of 2022, but the work to actually build it at scale happened in 2023.
Similarly, future historians will predict that 2024 will be marked by the addition of exchange-traded funds (ETFs) in the American market and the start of regulation in Europe under the Markets In Crypto Assets Regulation (MiCA). This will be seen as the beginning of a new regulatory era for crypto assets and blockchain. Again, much of the legal and regulatory work to make that happen for both ETFs and MiCA was done in 2023.
2023 was a surprisingly constructive year if we look at developments in blockchain and crypto assets. As we approach the end of what has been a difficult year from a business perspective, we still think we are continuing to make gains. On the other hand, if you don’t look at the actual work being done, all you’ll see are criminals and convictions.
｜Translation: CoinDesk JAPAN
｜Edited by: Toshihiko Inoue
｜Original text: Under the Hood, 2023 Was a Highly Constructive Year for Crypto