2024 will be a period of potential large-scale changes in the structure of the cryptocurrency market in favor of institutional demand, Ripple experts noted in the quarterly report.
Our latest XRP Markets Report is live — detailing Q4 events in crypto that brought important topics such as compliance and anti-money laundering to the forefront, key regulatory wins, and the latest on XRP Ledger integrations.https://t.co/5cuMXiVBjl
— Ripple (@Ripple) February 8, 2024
Among the significant factors for transformation, they named the development of the ETF sector, growing investor interest in “proxy BTC” in the form of shares of Coinbase, MicroStrategy and public Bitcoin miners, as well as regulation.
According to experts, the fourth quarter of 2023 has become significant in terms of widespread adoption of crypto assets. “Historic” October court decision in favor of Grayscale on an application in SEC the conversion of a Bitcoin trust into an ETF largely provoked bullish sentiment and a rally in the market.
Industry expectations for regulatory approval of exchange-traded funds based on the spot price of digital gold have risen sharply. In January, on the first day alone, trading volume for 11 products registered by the Commission exceeded $4.5 billion.
“Although this is just the beginning, [одобрение спотовых биткоин-ETF] has already become a turning point for the crypto industry and a signal of increased institutional acceptance and demand from experienced investors,” the experts emphasized.
The fourth quarter of 2023 became a period of growth for the industry
XRP trading volume in spot pairs increased significantly in October-November. The average daily value (ADV) reached $300-450 million, and by the end of the year it stabilized at around $600 million. Overall, ADV increased by 75-100% compared to the lows of the third quarter.
This was in line with the general trend in the market. Bitcoin's spot trading volumes increased by 88% quarter-on-quarter, while Ethereum's spot trading volumes increased by 140%.
By the end of the year CME has become the largest platform for trading cryptocurrency futures – in the fourth quarter, open interest jumped 300%, to $6 billion. Although this was largely due to the loss of market share of Binance, the migration contributed to the further establishment of digital currencies as a recognized asset class, experts noted Ripple. Decentralized options exchanges also became beneficiaries of the flow of traders, activity on which jumped by 300%.
Compliance comes to the fore
The legal problems of Binance and its founder Changpeng Zhao, as well as the court decision against ex-FTX CEO Sam Bankman-Fried, demonstrated the importance of compliance, experts say.
In July, Ripple won a partial victory in its case with the SEC. The court ruled that XRP itself was not a security and found most token sales and distributions unrelated to investment contract offerings.
However, this does not apply to a number of asset sales to institutional players. The parties will present their arguments in March-April 2024, after which the court will decide on possible sanctions.
Ripple noted that even before the June trial, they changed the way they offer tokens to organizations to comply with regulatory standards.
In the fourth quarter of 2023, the company continued to implement its program to expand regulatory compliance. Ripple has received a full major payment institution license from the Monetary Authority of Singapore (MAS) and registered as a virtual asset service provider in Ireland.
The firm also holds a BitLicense in New York State and is a licensed money transfer provider in 40 other US jurisdictions.
Global regulation of cryptocurrencies promotes their acceptance
According to experts, there was a positive trend in global cryptocurrency regulation in the fourth quarter, despite ongoing SEC lawsuits against Coinbase and Kraken.
The Dubai Financial Services Authority (DFSA) has opened external applications for tokens that may be approved for use in the Dubai International Financial Center (DIFC). Ripple was one of the first to take advantage of this opportunity for XRP.
The UK government has announced that it will launch a sandbox for digital securities, which will include debt, equity and money market instruments. In addition, the country's Ministry of Finance will study the banking problems faced by licensed crypto firms to stimulate innovation in the region.
Spain has announced that it will aim to implement the EU's fundamental Markets in Crypto-Assets (MiCA) legislation six months ahead of the July 2026 deadline.
In Asia, Hong Kong has prepared rules for tokenized real world assets (RWA). MAS has announced plans for a pilot RWA project in Japan, Switzerland and the UK.
Let us remind you that Cryplogger spoke about what regulatory changes affected the industry in 2023 in its New Year’s material.
Found an error in the text? Select it and press CTRL+ENTER
Cryplogger newsletters: keep your finger on the pulse of the Bitcoin industry!