• Regulatory Overreach: The Financial Action Task Force’s (FATF) Travel Rule is forcing exchanges and bitcoin service providers to document and share ever-more information about customer transactions, while politicians such as Elizabeth Warren are publicly going against Bitcoin.
• War On Cash: Many countries are taking high-denomination cash notes out of circulation, or banning physical cash transactions above a threshold, with many countries talking about central bank digital currency (CBDC) trials.
• Bitcoin Adoption: Governments may adopt Bitcoin as legal tender, hold Bitcoin in reserves, provide Bitcoin services for citizens, and encourage Bitcoin investors and entrepreneurs.
As we approach the end of 2022, it is time to turn our eyes to what will come in the new year. Bitcoin is likely to play a major role in 2023, with a number of themes already emerging.
The first of these is the increasing regulatory overreach that is being imposed on Bitcoin exchanges and other service providers. The Financial Action Task Force’s (FATF) Travel Rule is requiring ever-greater levels of information sharing and documentation about customer transactions, and this is likely to be a major issue in the coming year. This is in spite of the fact that some political figures, such as Elizabeth Warren, are publicly going against Bitcoin, with her proposed digital asset AML act having little chance of passing. Yet this does serve to foreshadow future battles that will have to be fought in the sphere of regulation.
On the other hand, governments are also likely to be increasingly open to Bitcoin adoption in the coming year. Just like with voice over internet protocol (VoIP) technologies (e.g., Skype), there is a possibility that some countries may adopt Bitcoin as legal tender, hold Bitcoin in reserves, provide Bitcoin services for citizens, and even encourage Bitcoin investors and entrepreneurs.
Finally, the war on cash is set to continue in 2023. We have already seen many countries taking high-denomination cash notes out of circulation, or banning physical cash transactions above a certain threshold. This trend is likely to continue into the new year, with many countries discussing the possibility of launching central bank digital currency (CBDC) trials. Though it is unlikely that many of these will be fully-functioning CBDCs by the end of 2023, it does set the stage for an increasingly cashless society in the near future. Governments may even force people into CBDCs in countries with high welfare states, as a way of ensuring that welfare checks are issued in the digital currency.
Overall, 2023 is likely to be an exciting year for Bitcoin and its associated technologies, with a number of developments likely to occur. Regulatory overreach may be an issue, but the possibility of more governments adopting Bitcoin and the continuing war on cash may have a positive effect on the industry in the long run.