Crypto Outlook 2023 – Forbes Advisor UK

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This has been a tumultuous year for cryptocurrency, capped off in spectacular fashion by the rapid demise of FTX.

But once the dust settles, what will the crypto industry look like in 2023?

It’s fair to say that, in a market fraught with uncertainty and risk, one thing we can be sure of is that buyer caution will remain the order of the day.

The United States Securities & Exchange Commission has accused FTX founder Samuel Bankman-Fried of orchestrating a scheme to defraud stock investors of FTX Trading Ltd (FTX), the crypto-trading platform. Investigations into other securities law violations and other entities and individuals connected to the alleged misconduct are ongoing.

SEC Chairman Gary Gensler said: “We allege that Sam Bankman-Fried built a house of cards on the basis of deception while telling investors it was one of the safest buildings of cryptography.

“The alleged fraud committed by Mr. Bankman-Fried is a clear call to crypto platforms that they need to comply with our laws… For platforms that do not comply with our securities laws, the division of SEC enforcement is ready to take action.”

Laith Khalaf, Head of Investment Analytics at AJ Bell, said: Crypto buyers should be prepared to accept a total wipeout of their investment due to the highly speculative nature of digital coins, but that shouldn’t be because that the exchange they used to make the purchase fails, taking their money with it.

This is what many FTX customers face.

Mr Khalaf says the vast influx of money into crypto has not been accompanied by appropriate levels of regulation: investors should be wary of handing over large sums to companies they know little about and which are unsupervised by a robust regulator.

He thinks that in the short term, crypto buyers are likely to become more discerning about who they use to buy and sell coins – a positive development in the wake of the FTX scandal.

Looking ahead to 2023, Khalaf believes the crypto industry could also adopt tougher regulation in order to attract and retain customers: existing financial assets sold on regulated exchanges.

The FTX scandal is clearly a punch in the nose for the crypto industry, but it is unlikely to be a fatal blow. The crypto community is large and neither demand nor supply will disappear overnight.

The new head of the Financial Conduct Authority, Ashley Alder, told MPs last week that further regulation of the crypto market was needed, with exchanges being his main concern: they should be regulated more. The point is this: when it comes to crypto assets, as opposed to the underlying blockchain, our experience to date with platforms, whether FTX or otherwise, is that they are deliberately evasive. They are a method by which money laundering occurs on a large scale.

Mr. Alder will be president of the FCA from February 20, 2023.

Andy Renshaw of anti-fraud specialist Feedzai said the FTX saga could bring benefits to the entire crypto industry: After the fall of FTX, it’s fair to say that crypto winter is here , and if there’s a silver lining for the year ahead, it’s that there will be a drop in cryptocurrency scams as investors move away from fear of missing out on decisions to review. closer to the market.

But, although cryptos risk has been fully exposed, it is still likely to attract potential investors and consumers should exercise caution and ask tough questions when making these types of investments.

Mr. Renshaw also warns that any drop in the rich selections available in the crypto market will push fraudsters into other areas: there are plenty of other investment scams to push. Using their familiar high-pressure tactics, scammers will likely try to lure investors into fake stocks, gold, or other commodity-related scams.

For banks, the advances in fraud techniques that we have already seen and the fact that fraudsters are constantly changing their tactics to stay one step ahead of anti-fraud and anti-money laundering measures should serve as a signal alarm that identity solutions alone are not enough. to stop scams.

By pressuring or manipulating their targets, scammers have found a way to circumvent safeguards such as two-factor authentication and even biometrics.

But the increased threat of scams also presents opportunities for banks. The liability of financial institutions shifts to cover losses due to scams. If banks proactively offer to protect their customers, they can offer an attractive differentiator in the market.

Mr. Khalaf at AJ Bell says 2023 will see continued turmoil in the crypto arena: this time next year Bitcoin could be trading at $5,000 or $50,000 and neither would be a complete shock, given that the market is driven almost exclusively by sentiment. Longer term, the longer-term adoption of crypto by consumers, businesses, and investors is deeply uncertain, making the underlying assets highly speculative.

This is especially the case given that many central banks have launched or are planning to launch their own digital currencies, which could usurp many beneficial functions of crypto.

Regardless of the long-term outlook for crypto, the journey will be one of swinging from feast to famine. 2022 has definitely fallen into the latter camp, with the FTX scandal deepening the crypto rout caused by a speculative asset sell-off.

If 2023 is to mark a turning point in sentiment, the crypto market is going to have to scale a significant wall of worry.

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