Strengths
· Bitcoin soared in 2023, climbing over 150% and proving to investors that it had the potential to recover following industry scandals such as Sam Bankman-Fried’s FTX collapse.
· As reported by CNBC, Bitcoin’s rally in 2023 helped to drive some of the stock market’s biggest gains this year. In fact, shares of Coinbase, MicroStrategy, and the Grayscale Bitcoin Trust (which are tied closely to the digital currency), all did substantially better than Bitcoin.
· As 2023 comes to an end, 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, according to Axios.
Weaknesses
· One of the more bizarre crypto stories of the year, according to CoinTelegraph, includes copycat NFTs. In October, a United States district court judge ordered Ryder Ripps and Jeremy Cahen to pay $1.57 million in damages to Yuga Labs for copying the Bored Apes Yacht Club (BAYC) nonfungible tokens (NFTs).
· The U.S department of Justice settled with crypto exchange Binance, concluding a criminal investigation into allegations of money laundering and sanctions violations. The settlement involved $4.3 billion in penalties, marking one of the largest corporate settlements in U.S history, writes The Block.
· Sam Bankman-Fried, the former CEO of FTX, was convicted on all seven criminal counts on November 2 of this year, including wire fraud and conspiracy
to defraud FTX customers. He now faces a maximum sentence of 115 years in prison, with Judge Lewis Kaplan scheduling sentencing for March 28, 2024, according to The Block.
Opportunities
· The United States District Court in the Southern District of New York granted a partial victory to Ripple Labs in the SEC case dating back to 2020. Judge Analisa Torres ruled that XRP is not a security when traded on digital asset exchanges but is a security when sold to institutional investors. Initially, the SEC fought to restrict Ripple’s token offering due to its alleged unregistered security status, according to CoinTelegraph.
· BlackRock’s spot Bitcoin ETF was listed on the Depository Trust & Clearing Corporation, which suggests the potential for approval by the United States SEC. The SEC has until January 10, 2024, to decide on Blackrock’s application.
· Hong Kong facilitated crypto trading for retail investors but with some limitations. Only certain types of tokens, such as security tokens, are allowed and only on platforms that are licensed and regulated by the Securities and Futures Commission, according to Analytics Insight.
Threats
· U.S presidential candidate Ron DeSantis has reaffirmed his opposition to central bank digital currencies (CBDCs), pledging to ban them in the U.S. if he is elected. DeSantis declared, “On day one, I will nix central bank digital currencies. Done. Dead. Not happening in this country.” He previously signed a bill in Florida prohibiting federal CBDCs and foreign CBDCs, writes CoinTelegraph.
· Changpeng Zhao, commonly known as “CZ”, co-founder of Binance, agreed to step down as CEO as part of a plea deal with the DOJ. Zhao pleaded guilty to violations of the Bank Secrecy Act and will pay a $50 million fine and potentially face a prison sentence of up to 18 months, writes The Block.
· Su Zhu, co-founder of the defunct crypto hedge fund Three Arrows Capital, was arrested at Singapore’s Changi Airport in September for failing to comply with a liquidation investigation, according to The Block.
