Season’s Greetings!

As we wrap up an eventful year, this edition of our weekly newsletter brings you an overview of the top 10 biggest cryptoasset news stories of 2023. From legal battles to technological advancements and more, the year has been full of excitement.

Here are our top ten highlights (and lowlights) of 2023:

1. Grayscale Court Victory Over SEC in Spot Bitcoin ETF

In May, the D.C. Circuit Court of Appeals finalised its ruling in the dispute between the SEC and Grayscale, directing the SEC to overturn its rejection of Grayscale's spot Bitcoin ETF application. This formal closure reaffirms the court's earlier decision that the SEC acted “arbitrarily and capriciously” in denying Grayscale's bid to convert its $17 billion Grayscale Bitcoin Trust into a spot ETF. 

Following the Grayscale court decision, SEC chair Gary Gensler recently hinted at reevaluating the regulator's approach to spot Bitcoin exchange-traded products. Gensler mentioned ongoing reviews of “eight to a dozen filings” and that “we're taking a new look at this based upon those court rulings.” for spot Bitcoin ETFs.

Grayscale Court Victory
Image Source: XEROF

2. Sam Bankman Fried Convicted of Defrauding Investors

Sam Bankman-Fried, who was the chief executive officer of the now-defunct FTX cryptoasset exchange, was found guilty of fraud, money laundering, and conspiracy in November and is now facing decades in prison. He was convicted of stealing billions from customer accounts and defrauding lenders at FTX's sister company, Alameda Research. The four-week trial concluded with the jury unanimously finding him guilty after just over four hours of deliberation. Sentencing is to take place on March 28, 2024.

3. Introduction of MiCA 

In a landmark move, the European Union introduced the “Markets in Crypto-Assets” (MiCA) legislation in 2023. MiCA aims to establish a comprehensive regulatory framework for cryptoassets, cryptoasset service providers, and issuers, bringing clarity to the market. The legislation categorises cryptoassets into electronic money tokens, asset-referenced tokens, and utility tokens, explicitly recognising the latter. 

Notably, MiCA excludes non-fungible tokens (NFTs) and decentralised finance (DeFi), leaving room for future regulatory considerations. The legislative journey involves a political agreement, achieved on June 30, 2022, and an upcoming technical agreement, setting the stage for MiCA's full implementation, likely in 2024.

4. The SEC Loses its Case Against Ripple and Denied Appeal 

In October, a federal judge in New York denied the U.S. Securities and Exchange Commission's (SEC) permission to appeal a decision regarding Ripple Labs. This marked a significant setback for the regulatory body in its efforts to oversee digital currency markets. The judge, Analisa Torres, ruled in July that XRP is not in and of itself a security and that Ripple's XRP token sales on public exchanges adhered to federal securities laws. The SEC sought to appeal Torres' findings on “programmatic” XRP sales and “other distributions” of XRP as payment for services. 

However, the judge concluded that there was no substantial basis for a difference of opinion and that an appeal would not significantly advance the case.

5. The SEC Sues Coinbase and Binance 

In June, the SEC filed over a dozen charges against Binance and its CEO, Changpeng Zhao. The accusations included misleading investors and running an unregistered, hence illegal, exchange. 

Following its action against Binance, the SEC launched a lawsuit against Coinbase in June. The SEC alleged that Coinbase, since at least 2019, has made billions by operating as a middleman on digital asset transactions, evading disclosure requirements meant to protect investors. After the lawsuit, Coinbase's net customer outflows reportedly reached around $1.28 billion, causing a significant decline in its parent company's shares.  

Bitcoin’s Price Soars by 164% in 2023
Image Source: XEROF

6. Bitcoin’s Price Soars by 164% in 2023

In 2023, Bitcoin displayed resilience and recovery, marking a significant turnaround from the challenges faced in 2022. Despite low trading volumes and economic uncertainties, Bitcoin surged by 164% since January, surpassing traditional assets like gold and the S&P 500. Its dominance rose from 38% to over 50%, and the overall cryptoasset market cap reached $1.7 trillion. 

The anticipation of a U.S.-spot Bitcoin ETF and optimism about monetary policy contributed to Bitcoin's late-year gains. Stablecoins saw their market cap soar to over $90 billion at the same time, with Tether serving as the leader. 

However, it is worth noting that although Bitcoin performed very well this year, fundraising for cryptoasset startups experienced a significant decline, plummeting to around $7.96 billion from $29 billion in 2022. This downturn reflected the impact of various challenges faced by the industry.

7. Mixin Network Hack

In September, the Mixin Network fell victim to a hack, losing nearly $200 million. The attack targeted the database of Mixin Network's cloud service provider. The platform, operating similarly to a layer-2 protocol for more efficient cross-chain transfers, faced criticism on Twitter for its centralised database, which was considered a single point of failure. 

As of July, the top 100 assets on Mixin Network had a combined value of just over $1.1 billion, with 663,489 unique monthly Bitcoin transactions and 179,647 Ether transactions reported.

Despite a decline in the total amount lost in digital currency hacks compared to 2022, vulnerabilities in exchanges led to losses totalling around $3.7 billion in 2023. 

8. Ethereum's Dencun Upgrade and the Introduction of Account Abstraction

Ethereum leapt forward in innovation with ERC-4337, also known as “Account Abstraction,” changing how the blockchain handles user accounts and interactions. This concept simplifies the user experience by abstracting complexities while maintaining network security and flexibility. 

Account Abstraction treats all accounts, including Externally Owned Accounts (EOAs) and contract accounts, as smart contracts, streamlining network operations. From a user perspective, it enhances wallet designs and reduces complexity, making interactions more user-friendly. The transformation introduced “smart accounts,” allowing for customisation, shared access, and secure wallet recovery without seed phrases.

9. XEROF Delivers Strong Performance for 2023

At XEROF, we reported substantial growth in transaction volumes and heightened demand for cryptoasset-to-fiat services. We were pleased to report a 500% increase in transactional volume from H1 to H2 2023, facilitating transactions involving cryptoassets and major fiat currencies.

 The number of ultra-wealthy individuals and family offices utilising our cryptoasset diversification services also increased by 40%. The company's banking partnerships have grown by 500%, reflecting the increasing involvement of banks in the cryptoasset space. XEROF's services extend to facilitating global purchases with cryptoassets, aiding institutional investors in digital currency positions, and serving as the preferred payment processor for international companies.

10. XEROF Launched Bitcoin AMC

In June, XEROF unveiled a $100 million Bitcoin actively managed certificate (AMC) in collaboration with GenTwo, designed for institutional investors. The Bitcoin asset itself is held by a Swiss bank in the certificate, and XEROF guarantees daily liquidity via its cryptoasset brokerage exchange. 

By removing the need for institutions to own Bitcoin outright, the AMC simplifies custody issues and allows for cryptoasset diversification. The XEROF Bitcoin AMC exposes the underlying asset while retaining the asset under management. In November, XEROF's co-founder, Nick Ntigrintakis, shared the numbers on XEROF's BTC tracker.

The tracker shows that we started at $983.17 on July 11, 2023, and climbed to $1,073.09 by November, a 9.14% jump. For context, the NASDAQ went up 4.5% in the same period.

About XEROF

XEROF is a Swiss-licensed Crypto Gateway that offers exchange services for customers who possess crypto wallets and want to use them as fiat currency to purchase real estate properties and luxury goods.

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