Dec 20, 2023 - Business

From NFTs to XRP: the biggest crypto stories of 2023

Photo illustration of Sam Bankman-Fried, the Capitol dome, a gavel, and pink slips in the background

Photo illustration: Sarah Grillo/Axios. Photo: Yuki Iwamura/Bloomberg via Getty Images

2023 was a brutal year in the cryptocurrency industry, one in which the worst miscreants of the 2021 boom by and large met justice.

Why it matters: With bitcoin on the rebound and macro conditions improving, digital assets have a chance to make a different set of headlines in 2024 — but it remains to be seen if lessons have been learned, either by entrepreneurs or financial cops.

State of play: Bitcoin, the coin that drives all others in crypto, has now recovered to its trading level from before the terra usd stablecoin meltdown in May 2022.

  • And its price is also twice as high as it was the last time crypto "died," after the collapse in 2018.

What we're watching: Next year, two big events could further drive demand: the expected approval of long-awaited bitcoin ETFs, followed shortly thereafter by the Bitcoin halving, a programmed event designed to control supply.

  • These conditions could make for the first bitcoin-led bull market since 2013.
  • But that's next year. First, let's take a look back at what happened in this one.

Blockchains' biggest stories of 2023

🔟 Blur besting OpenSea

  • It seemed like 2023's big battle in non-fungible tokens (NFTs) would be whether or not to honor artist royalties — but it turned out that winning over professional traders was the real one.
  • Blur, an upstart, seems to have done it. OpenSea, the market leading marketplace, has been playing catch up.

9️⃣ Layoffs: the sequel

  • Speaking of OpenSea, it was one of many top-tier crypto companies that announced 2022 layoffs, but that wasn't enough. Big companies like Blockchain.com, Coinbase and, yes, OpenSea, had follow-up rounds of deep cuts this year.
  • Binance also announced layoffs in 2023, which is notable because, after Coinbase announced its first round of cuts in 2022, Binance's then-CEO, CZ, had bragged that he was still hiring.

8️⃣ The king of Ethereum staking

  • The Ethereum blockchain is now secured by over 20% of the supply of ether (ETH) in the world, and 40% of that is managed by Lido, a staking derivatives protocol.
  • If anything, it's almost been too successful, with Ethereans fretting it poses a new kind of centralization risk for the world's second largest blockchain.
  • Yes, but: Lido's governance token has doubled in value over the course of the year.

7️⃣ Celsius CEO Alex Mashinsky arrested

  • Celsius was a company that rode hype in the prior boom to a fat war chest it used to launch a crypto lender.
  • Its founder, Alex Mashinsky, famously said that banks were underpaying depositors for lending them their hard earned cash. Mashinsky would often say variations of "Either the bank is lying or Celsius is lying."
  • In July, the bet on which one might be right got a lot clearer.

6️⃣ The partisan divide comes for blockchains

5️⃣ SEC's Grayscale loss

4️⃣ The depegging of USDC as Silicon Valley Bank fails and regulators shutter Silvergate and Signature Banks

  • Remember that fun week this spring that nearly wrecked the whole banking system?
  • Amid it all, two of the most crucial pieces of crypto infrastructure were shut down by regulators: Signature and Silvergate banks, which allowed the big exchanges to send each other dollars 24/7.
  • On the blockchains, the brouhaha knocked the biggest U.S.-domiciled stablecoin, usd coin (USDC) off its peg badly, putting it on a long, slow decline in market share.

3️⃣ Sam Bankman-Fried found guilty on all counts

  • The founder of FTX was found guilty on multiple counts of fraud. Sentencing will happen next year. He's now in jail in Brooklyn.
  • It might seem like this should be the No. 1 piece of news, but the truth is the ramifications of the decision had pretty much played out before the first day of the trial.

2️⃣ Changpeng Zhao out at Binance, possibly headed to jail

  • Meanwhile, changes afoot at the world's largest crypto exchange, Binance, are still in play.
  • The company has a new CEO. It has regulators watching closely to make sure they are checking out customers thoroughly.
  • Zhao could end up doing time and he could come back in 2025 or so.

1️⃣ XRP ruled not a security

  • The year's biggest bombshell remains mostly misunderstood. While the court found some impropriety in how Ripple Labs originally offered its cryptocurrency, xrp (XRP), this was a footnote that history will ignore.
  • What really mattered: U.S. District Judge Analisa Torres ruled that the asset today no longer qualifies for securities regulation. This was SEC chair Gary Gensler's worst loss, coming on what has been the biggest legal issue for digital assets: How the government categorizes these instruments determines how freely they can trade in the US.

Quick take: Torres' ruling could be overturned, but, long term, it's hard to imagine that the United States won't eventually find a way to live with normal people handling newfangled coins and tokens.

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