The Web 3.0 industry in 2023 will be a "future-oriented" year; Top topics for 2024 and the "Top 10" articles of the year selected by the editorial department

2023 is about to come to an end. In the Web3.0 industry, the cryptocurrency market is booming, and people are likely looking forward to the new year with high expectations for the coming year.

If you were to describe the Web3.0 industry in 2023 in one word, the first word that comes to mind is "future-oriented."

Last year was a year with a strong negative impression, due in part to various scandals. Therefore, the theme of 2023 can be said to be how to break away from the sluggish market and the growing headwinds worldwide.

Looking outside the Web3.0 industry, this year has been a year in which the rise of AI has been remarkable worldwide. It has also been attracting a lot of attention in Japan, and according to the "2023 Information and Communications White Paper" published by the Ministry of Internal Affairs and Communications, the AI ​​market will continue to expand, and the domestic market size is expected to expand to 1,103,477 million yen by 2027.

Demand for generative AI in particular has increased rapidly. As can be seen from the fact that the major American semiconductor company NVIDIA has achieved its highest ever performance, expectations for AI have reached a climax.

On the other hand, "deep fakes," which use AI to create malicious images and videos, have developed into a social problem. In Japan, a fake video of Prime Minister Fumio Kishida was created and became a major issue. In addition, there are movements to regulate AI in various countries, especially in Europe, and the extent to which technological development should be tolerated and utilized will continue to be discussed.

In addition, optimism in the financial markets grew in the second half of the year as the Federal Reserve Board (FRB) was on track to raise interest rates. At the time of writing, the Nasdaq was up about 43% since the beginning of the year, and the Nikkei average was up about 29%, so stock prices have returned to the level of the monetary easing period. The Nikkei average has risen to its highest level since March 1990.

The FRB has kept the policy interest rate unchanged since raising it by 0.25% in July. As a result, speculation is spreading that interest rates will be lowered next year, and this expectation is reflected in stock prices. Some believe that interest rates will be lowered as early as March, and there is a possibility that funds will flow into the cryptocurrency market at the same time.

Stock price trends are also affecting the Web 3.0 industry. The cryptocurrency market has entered a "winter period" since November last year due to the worsening market conditions, and Bitcoin also started the year at $16,000 (about 2.3 million yen). However, just like stock prices, the price rose sharply through the fall, and finally reached $44,000 (approximately ¥6.3 million) in early December, the highest since May of last year.

However, the price of Bitcoin topped out at $30,000 (approximately ¥4.3 million) between April and July, and fluctuated around $26,000 (approximately ¥3.7 million) from September to early October.

This situation changed with the decision to approve a Bitcoin spot ETF in the United States. In mid-October, a report was published that a Bitcoin spot ETF applied for by BlackRock, the world's largest asset management company, had been approved. Although this was actually fake news, the price of Bitcoin rose significantly in response.

The fake news had been laid. In a lawsuit over the conversion of GBTC (Bitcoin mutual fund) offered by Grayscale, a major crypto asset management company, into a spot ETF, the SEC (U.S. Securities and Exchange Commission) did not appeal by the deadline. The SEC lost the case and was ordered by the court to re-examine the conversion of GBTC into a spot ETF.

With the ruling now finalized, all companies applying for a Bitcoin spot ETF will have a favorable situation.

Currently, there are 13 applications for Bitcoin spot ETFs in the United States. The SEC has mentioned that if the applications for most of the ETFs are not completed by December 29th local time, they will not be approved in early January. Given this, the approval of a Bitcoin spot ETF is already in a countdown, and the market is gradually beginning to accept this. It is highly likely that it will be approved as early as January 5th.

The SEC is softening its view of Bitcoin spot ETFs, but there is still a possibility that it will continue to take a tough stance on the industry.

This year, the SEC has filed lawsuits against major cryptocurrency exchanges such as Coinbase and Binance, tightening its grip on the industry. On the other hand, the SEC suffered a de facto defeat in a lawsuit against Ripple over XRP being an unregistered security, which had been ongoing since 2020. The SEC's softening of its stance on Bitcoin spot ETFs may have been influenced by its loss in the lawsuit against Ripple. At the very least, it can be said that the long-running dispute has had a positive impact on the cryptocurrency industry, as it has brought a resolution to the dispute.

One event that shocked the industry was the resignation of CZ, the founder and CEO of Binance. His resignation can be said to be a turning point in the history of the industry.

Regulatory authorities, including the SEC, filed lawsuits against Binance, its US subsidiary Binance US, and CZ for violations of anti-money laundering laws. Binance initially showed an attitude of fighting the regulators, but the situation changed in November. It admitted its own shortcomings and agreed to a plea bargain, reaching a settlement.

The settlement amount was $4.3 billion (approximately 608 billion yen), the largest fine ever imposed on a company in the United States. CZ also paid $50 million (approximately 7 billion yen) as a personal payment. The settlement terms also included CZ's retirement from management and a ban on involvement with Binance for three years. Binance itself will also be supervised for five years.

However, this event itself can be considered not to be negative. The longer the battle with regulators continues, the more likely it is that industry progress, including regulation, will be halted. If Binance were to fall into a catastrophic situation, it is easy to imagine that it would have a huge impact on the entire industry. It would also hinder Binance's growth as a company.

Considering these factors, it can be said that Binance and CZ's decision was a future-oriented one that symbolizes 2023.

Binance's new CEO is Richard Teng, who has more than 30 years of experience in the financial industry and has communicated with regulators globally. It is expected that more and more attention will be paid to how he will lead Binance, whose market share is shrinking due to the battle over regulations with the United States and the rise of emerging cryptocurrency exchanges.

Looking at the domestic market, this year has seen progress in many areas. The industry's requests are beginning to take shape, such as the relaxation of requirements for end-of-year valuation taxation for companies and the growing momentum for revision of leverage ratios.

In particular, with the enforcement of the revised Payment Services Act, stablecoins are now regulated and can be used as a means of payment, which is a major step forward. At the same time, the battle to gain dominance in new fields will intensify.

Mitsubishi UFJ and Progmat, which operates the Progmat platform for stablecoins and other digital assets, are already stepping up their efforts. At the moment, both are becoming a step ahead in the stablecoin field.

Stablecoins backed by the Japanese yen and based on the Payment Services Act are expected to be launched around June next year. Since JPYC, a pioneer of stablecoins in Japan, and Binance Japan, the Japanese subsidiary of Binance, have both expressed their intention to issue stablecoins based on the Payment Services Act for specific purposes, it is inevitable that stablecoins will become an area to watch as an important keyword in 2024.

The following events are noteworthy in 2024.

• Approval of Bitcoin spot ETF
• 4th Bitcoin halving
• US presidential election
• Penetration of RWA (real assets)

It goes without saying that Bitcoin spot ETF will be approved, but the halving expected to occur between March and April is also an event to watch. Bitcoin's price has risen significantly since the halving, and this time it is no exception and must be watched.

In addition, the US presidential election scheduled for November will be an event that will affect not only the Web 3.0 field but the entire world. If the administration were to shift to the Republican Party again, it is expected that the stance on the Web 3.0 field would also change significantly. Furthermore, depending on economic trends, there may be significant price fluctuations in crypto assets.

And RWA, which is gaining attention in the second half of this year, has the potential to become an even bigger buzzword in 2024. Tokenization of real estate, commodities, etc. has been attracting attention for some time, but as legal developments and other measures are progressing in various countries, there is a possibility that demand will increase in earnest.

In Japan, the Osaka Digital Exchange (ODX), established by SBI Holdings and Sumitomo Mitsui Financial Group, began trading security tokens for the first time in Japan in December. At the time of writing, only two types of tokens are available, but the number is expected to increase in 2024.

I have described 2023 as a year of prominent future orientation, and I think Japan is a prime example of this. The ruling party's tax reform outline, approved by the Cabinet at the end of the year, also included a partial relaxation of the cryptocurrency tax system for the second consecutive year. Although the content itself does not leave as much of an impact as last year, it can be appreciated that they are making steady progress. In the future, it is highly likely that tax reforms will be made for companies first in order to prevent promising startups from moving overseas. It is expected that the cryptocurrency tax system for individuals will also be revised at some point, but in the current situation, it will be a long road.

In addition, in Japan, the advancement of large companies in particular into the Web 3.0 field was noticeable. The power of large companies will be indispensable for Japan to compete with the world in this field. This movement will accelerate even further in 2024, and there will be more cases of collaboration with Web 3.0 native companies.

On the other hand, there have been voices since the beginning of the year positioning 2023 as the "year of Web 3.0 mass adoption," but in reality, it is difficult to say that it has penetrated significantly due to market conditions and other factors. Blockchain games, which were expected to be a factor in promoting mass adoption, have not had much impact from an objective point of view. The difficulty of carefully designing an ecosystem while pursuing the fun of the game seems to have been a major challenge.

In the first half of 2024, there will be many relatively positive topics due to the approval of a Bitcoin spot ETF and the Bitcoin halving, which may be reflected in the market.

On the other hand, we should also consider the possibility that the second half of the year may be somewhat turbulent, taking into account trends in the global economy.

Given past cycles, there are frequent voices pointing out that the market may peak in 2025. With that in mind, 2024 will be an extremely important phase as a preparation period for a jump up.

The Web 3.0 industry has overcome winter and is steadily heading towards spring. It may take some time for the buds to sprout in earnest, but 2024 may be a year in which various flowers begin to bloom little by little.

This year has seen a variety of events in the Web 3.0 industry. We look back on the events that colored 2023 from our own perspective.

To look back on the events of 2023, we will introduce five "most viewed feature articles" on Iolite this year, as well as five "important news articles" selected by the editorial department.

Iolite Annual Feature Article Ranking

1st place: Samurai guitarist MIYAVI: A look at his encounter with the guitar, and the MIYAVI-ness he achieved through setbacks and hardships

The main interview in the November 30th issue, which was our magazine's first to reach the top of the Amazon rankings in its category. Samurai guitarist MIYAVI's roots and way of thinking are explored from a business magazine's unique perspective, along with all the manuscripts that could not be included in the magazine. Click here for the article

2nd place: Toshinao Sasaki's thoughts on why DX is not spreading and the background Tech and Future Vol.1

Journalist Sasaki Toshinao checks over 1,000 article headlines every day and shares around 10 news stories every morning at 8am. His input, which has also led to the publication of many books, must be cultivating the foundation for his ideas. I hope you will find the seeds of your own original ideas. Click here for the article

3rd place: Close-up coverage of STEPN & interview with co-founder Yawn: The hidden power of one of the leading communities in the Web 3.0 field and the outlook for the project—

It is no exaggeration to say that STEPN led the era of "Play to Earn". It is still popular, and there are communities not only in Japan but all over the world. The enthusiasm felt throughout the day of the event and the next vision revealed exclusively by co-founder Yawn are written down. Click here for the article

4th place: Semiconductor-related stocks in the spotlight What stocks to look out for in 2024

The boom and bust that have been repeated in the short term in the semiconductor industry have suddenly become one of the areas of interest due to concerns about chronic shortages due to the market conditions where the transition to a global digital society is accelerating. What are the future trends of semiconductors, which are essential for utilizing IoT, AI, 5G, and big data? Click here for the article

5th place: Mariko Mabuchi, Featured Economic Analyst, discusses her stock selection and future economic forecasts

An interview with Mariko Mabuchi, an economic analyst who is very popular in the media, asking her tips for beginner investors to step up. With the new NISA starting in 2024, and with the growing interest in investment, we asked Mabuchi about how to acquire the necessary knowledge, the key points for stock selection, and future economic forecasts. Click here for the article

Editor's selection of "Important news for 2023"

- Revised Fund Settlement Act that includes stable coins goes into effect, and travel rule support also begins (06/01)

The revised Fund Settlement Act, which defines stable coins as electronic payment means, has gone into effect, making it possible to issue stable coins backed by legal tender such as the Japanese yen and value. This has accelerated the activities of various companies and others, making it one of the events that symbolize 2023. Click here for the article

- US major asset management company BlackRock applies for Bitcoin ETF (06/16)

BlackRock, the world's largest asset management company, applies for a Bitcoin spot ETF. BlackRock's ETF applications have a high probability of being approved, which is one of the factors that has made the approval of a Bitcoin spot ETF more realistic. Click here for the article

- Grayscale wins lawsuit against US SEC, giving a big boost to the approval of a Bitcoin spot ETF (08/30)

A court ordered the SEC to reconsider its rejection of Grayscale's application to convert a Bitcoin mutual fund into an ETF. The SEC has also suffered a de facto defeat in a lawsuit against Ripple, a US company, which has been ongoing since 2020, putting it in a tough position. Click here for the article

- Progmat, the operator of "Progmat Coin," announces new management structure, Saito appointed as CEO (10/02)

Progmat, Inc. was established as a company that handles "Progmat Coin," a platform for issuing and managing digital assets. It was initially handled by Mitsubishi UFJ Trust and Banking Corporation, but the spin-off is expected to accelerate stablecoin-focused activities more than ever before. Click here for the article

- Binance's CZ resigns; to pay fine of 640 billion yen in settlement with US Department of Justice (11/22)

CZ, the founder of Binance and a leading figure in the industry, has resigned as CEO. The settlement appears to have been reached after he admitted to the lawsuit filed against him by the SEC and CFTC, but CZ's retirement is a symbolic event that shows that the industry is at a turning point. Click here for the article