Despite the crypto winter of 2022, expanding regulations will boost crypto adoption in 2023, including by institutions, argues Dmitry Ivanov, CMO at CoinsPaid.
One of the remarkable events in the crypto industry in 2022 was the bearish crypto market. However, there was an increased rate of crypto adoption simultaneously. A recent Fidelity report showed that nearly 58% of institutional investors globally last year invested in digital assets. Another 2022 report, the Cryptocurrencies in Retail Consumer Adoption by CryptoRefills, showed that demand for crypto payments grew significantly in 2022. Nearly 48% of millennials and 32% of high-income consumers in the US positively view cryptocurrency as a viable payment method
While a recent survey conducted by Deloitte showed that nearly 75% of retailers plan to accept cryptocurrency or stablecoin payments, the above-stated report outlined that approximately 40.5% of crypto users stated the lack of crypto payment solutions by merchants as an issue.
That being the case, what trends in crypto adoption will be of great significance for one's business success during crypto winter and beyond? As a professional in this industry, here are three crypto trends I think one should consider exploring in 2023.
Expanding regulations and how they will facilitate crypto adoptionLast year, 2022, the crypto industry experienced some remarkable events that left more calls for stringent crypto regulations in various countries worldwide. These regulations aim to prevent risks for investors, build confidence in the market and encourage greater adoption.
For instance, on 16th December, the Biden administration, through the Financial Stability Oversight Council (FSOC), called for more strict and clear regulations following the FTX collapse. It made a few recommendations to Congress for policies that ensure financial stability and protect investors and national security. FSOC also called Congress to look into the "regulatory arbitrage" process crypto firms use to bypass US oversight.
From my point of view, if government regulators formulate well-structured regulatory frameworks, it will bring healthy development in the crypto sphere. First, it will profoundly minimise bad actors in the crypto space. Additionally, the market will be less prone to manipulation. Consequently, this move will enhance safety for investors in the market and even boost crypto adoption by institutional investors.
Japan and South Korea are among the top crypto-friendly countries and are often illustrated as successful crypto economies. Both have proved that crypto adoption can succeed if strict regulations exist.
More institutional investors actively investing in cryptoOn top of proper crypto regulations, increased crypto investments by institutional investors are significantly boosting crypto adoption. Crypto winter has been quite a challenge for most short-term investors for the large part of 2022. However, most institutional investors have a positive outlook on the market's potential. According to a survey by Coinbase, 62% of institutional investors increased their crypto allocations over 12 months, and 71% believe that digital asset valuation will increase over the long term, even with the prolonged crypto winter.
Further, a similar survey by Fidelity Digital Assets showed that by the end of the second half of 2022, approximately 58% of institutions surveyed were holding cryptocurrencies. There was a 6% increase from last year despite the bear market condition. It's a sign of a potential long-term uptrend of digital assets.
The South Korean government has allocated a whopping $200 million that is being invested in metaverse projects, and in August 2022, we saw Shima Capital debut a similar amount to support web 3 firms. Notably, one of the UK's banking leaders, Barclays, has invested $2 billion to acquire a stake in one of the fast-evolving crypto custody firms, Copper.
I would say that institutional investors see the potential and possible uptrend of the crypto market over time. More institutional investors joining the bandwagon will accelerate crypto mass adoption. Above all, it broadens crypto's path to becoming a mainstream asset class.
Web3 will integrate more into businesses, especially the luxury segmentAs Web3 technologies advance rapidly, they're creating new opportunities for businesses in various sectors, from finance, manufacturing, and gaming to fashion. Case in point, more companies would soon want to explore new models of commerce and customer touch points.
Over the past years, cryptocurrencies and blockchain technology existence and application have revealed their intense influence over the luxury industry. For instance, prominent luxury fashion and lifestyle brands such as Off-White, Gucci, and Equinox integrated crypto payment options to accommodate the ever-evolving customer base. The same trend has been adopted by luxury watch and travel companies such as Hubolt and Travala.com, who allow their customers to pay via bitcoin and other major cryptocurrencies.
However, crypto still has the potential to stir this industry to the predicted $1.5 trillion mark by 2025. Recently, more major luxury brands, including Louis Vuitton, Nike, Givenchy, and Dior, have already embraced opportunities presented by the metaverse and are investing in it.
I would say crypto adoption will significantly benefit the luxury industry in 2023 and beyond. It will enhance high-level transparency in the entire supply chain, from tracing product inputs and final products to product authentication. Additionally, crypto will provide more payment method options for luxury products. Most of all, it will enable customers to tokenise non-fungible assets that are tradable or exchangeable.
Bottom lineCrypto awareness is growing far and wide. As more people understand it and how it works, more consumers and businesses will be interested in exploring digital assets. Subsequently, crypto adoption and demand will scale up.
Notably, some recent crypto trends have shown the potential to boost crypto adoption and growth in various ways. A push for proper crypto regulations is winning most investors and reassuring them of a safe market to put in their money. Additionally, institutional investors are seeing crypto's long-term potential; thus, they're allocating more investments even during the crypto winter. Finally, cryptocurrencies and blockchain technology have shown their essence in enhancing customer experience and service in the luxury industry.
*Dmitry Ivanov is CMO at the crypto payments ecosystem CoinsPaid.
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