KPMG – Virtual Assets 2023 Review and 2024 Outlook

KPMG's Virtual Assets 2023 Review and 2024 Outlook provides an overview of the cryptocurrency industry, highlighting key events and developments throughout the year. In January, the application of ordinal theory to the Bitcoin protocol allowed for the inclusion of arbitrary content to individual satoshis, expanding Bitcoin's functionality. February saw the emergence of Blur as a competitor to OpenSea in the NFT market, capturing a majority share of trading volumes. In March, the collapse of two major crypto on-ramp providers, Silvergate and Signature Bank, led to bank runs due to liquidity concerns. April brought a significant upgrade to the Ethereum blockchain with the Shapella upgrade, improving scalability and transaction costs. Regulatory clarity became a focus in May and June with the European Union publishing a virtual asset regulatory framework and Hong Kong introducing a licensing regime for VATPs. Traditional financial institutions, such as BlackRock, showed increased interest in Bitcoin ETFs in June, raising expectations of institutional adoption. The SEC vs Ripple case in July determined that Ripple's XRP token qualifies as a security only when sold to institutions and not to the public. Throughout the year, hacking incidents occurred, but the overall volume of stolen funds decreased by 50% compared to the previous year. Notable events also included the successful overturning of the SEC's rejection of Grayscale's spot Bitcoin ETF application, the conviction of Sam Bankman-Fried for fraud and conspiracy related to the collapse of FTX, and the settlement between Binance and US regulators for compliance violations. The year concluded with the launch of Helium Mobile, a Solana-based carrier that demonstrates the potential of decentralized mobile communication infrastructure networks.