As 2023 has come and gone, it’s a pivotal moment for us at WisdomTree Prime to reflect on a year marked by significant developments and transformative changes in the world of blockchain and digital assets. In a landscape often characterized by rapid technological advancements and regulatory shifts, staying informed and ahead of the curve is not just an option, but a necessity. This year, our expert digital assets team has been at the forefront of these changes, offering insights and navigating complexities in the realms of Anti-Money Laundering (AML), digital assets broadly, Research, and other industry sectors. Here, we present key perspectives from three of our influential thought leaders, shedding light on the milestones of 2023 and setting the stage for what lies ahead in 2024.
John Davidson (Head of Global Financial Crimes – Digital Assets) on AML and Blockchain Technology:
“Blockchain technology presents incredible opportunities to assist law enforcement and national security agencies. In 2023, blockchain analytics helped identify and thwart bad actors in a number of high-profile cases. The public-based nature of transactions on the blockchain allows a truly unique ability for law enforcement to ‘follow the money.’ Additional regulatory clarification for digital assets in the US would further benefit the fight against financial crime and terrorist financing.”
Benjamin Dean (Director, Digital Assets) on Bitcoin’s Resilience:
“The local bottom for Bitcoin’s price came in December 2022 in the wake of the collapse of crypto exchange FTX (approx. US$16,000). Since then, against a background of rising interest rates in many major economies, the price of Bitcoin has recovered (US$41,000 on 3 Dec. 2023). This has made for an interesting past year because, as press headlines have been filled with stories about SEC allegations against major exchanges and civil settlements with entities like Binance, the price of Bitcoin has continued to rise. This points at a sometimes overlooked element – the Bitcoin network continues to create a new block every 10 minutes on average. The network has never been stronger in terms of hash rate used to secure the distributed ledger. Commercial and investor opportunities should continue to expand in 2024. The SEC has approved a bitcoin spot ETF. All of this points to a promising 2024 as Bitcoin continues to move along the adoption curve – becoming ‘another piece of furniture in the room’ – i.e. just another thing that is simply a given.”
Blake Heimann (Head of Quant Research) on Technological Advancements:
“In the past year, the blockchain and digital assets space witnessed significant technological advancements. Ethereum’s successful transition to Proof-of-Stake in 2022 was followed by the eagerly anticipated ‘Shanghai Upgrade’, allowing Ethereum stakers access to their rewards directly on-chain. Stablecoins, with a market capitalization of over $100 billion, emerged as a vital tool for crypto natives to park assets into a cash-like vehicle during market volatility. The demand for yield on these assets further led to the surge in tokenization of traditional assets on chain, now exceeding $600 million in value in U.S. treasuries alone. Layer 2 solutions expanded, boosting Ethereum’s scalability for faster, cost-effective transactions across various sectors, facilitating its journey to mainstream adoption. Even Bitcoin introduced ‘Ordinals’, enabling non-fungible token like capabilities to be brought into the domain of its blockchain. Despite a challenging market backdrop, the resilience displayed by promising innovations throughout 2023 has laid a robust groundwork for the upcoming year.”
2024 and Beyond
As time marches on, much like a Bitcoiner’s motto “tick, tock, another block”, it’s clear that the world of blockchain and digital assets continues to evolve at a breathtaking pace. The insights from John Davidson, Ben Dean, and Blake Heimann underscore the diverse yet interconnected nature of our industry. From advancements in blockchain technology aiding law enforcement to the unwavering strength of the Bitcoin network and the groundbreaking innovations in Ethereum’s ecosystem, 2023 has been a testament to the resilience and potential of digital assets. Looking ahead, we at WisdomTree Prime remain committed to navigating these dynamic waters, armed with the expertise and foresight to embrace the opportunities of 2024 and beyond.