What 2023 may have in store for crypto industry?

As the year 2022 draws to a close, it would be interesting to take a look at what's in store for the blockchain and crypto industry in the year to come. And this has to be seen in the wake of how the blockchain and crypto industry performed in 2022. Mind you that in 2022, the crypto industry witnessed landmark events including the Ethereum Merge Upgrade, the launch of Central Bank Digital Currency (CBDC) as well as the Government of India's new crypto tax policy. While market fluctuations and unfavourable tax implications have affected overall trading volumes and sentiment, there is no doubt that investor education has helped in increasing the adoption of crypto and will continue to be a priority. Moreover, for any new asset class in its nascency, a fair amount of volatility is to be expected.

Sector analysts point out that in the year going by, one of the biggest blockchain networks, Ethereum, switched from the 'Proof of Work' consensus algorithm to the 'Proof of Stake' consensus algorithm, cutting their electricity consumption by 99 per cent. Also Web3 made gigantic strides to become an applicable technology of the future. Web3 and crypto, while still in their nascent stage, have taken the world by storm and investors across the globe are realizing the multitude of opportunities it offers. 2022 has been a big year for the Web3 and crypto space, with new projects and protocols launched while existing ones continue to grow and evolve.

At this outset, one must take a look at the expectations in 2023. In 2023, sector experts expect to see the continued development of Web3 infrastructure with continued attention to investor education and awareness and establishment of the Industry Recovery Initiative (IRI) to protect consumers and rebuild the industry.

Having said these, one must also remember that in the new year, it should be the responsibility of all players in the crypto and Web3 ecosystem to foster a sense of security among its consumers. Putting in the right protocols and practices in place to avoid the impact of black swan events will be crucial to success. Those businesses that operate with transparency, strong ethics and values, while protecting consumer interests will succeed.

There are many who think that the year to come will weed out businesses with weaker models and practices. Sustainability and financial inclusion will be strong themes, promoting mass adoption of the asset class. One key item on the wish list of all Web3 and blockchain players this year would be a favourable regulatory framework that will protect investors, while encouraging innovation to create newer avenues to transform business across the spectrum, for all stakeholders in the industry to thrive.

Blockchain technology is expected to emerge as the defining aspect of Web 3.0 and once empowered with such autonomy, people will partner with the government, enabling citizens and organizations to play a meaningful role in shaping a future where profit and purpose go hand in hand. Whether India's G20 Presidency helps in establishing an innovative regulatory framework based on new technologies and assists in creating a favourable environment for the crypto industry, that remains to be seen.