The Top 10 Events of 2023

Aaah, 2023!?

How will we describe thee to our future grandchildren, from the front porch rocking chairs of the modest 1,200 sqft, CA$82M cottage to which–thanks to Bitcoin–we will have retired early back in 2034?

As we bid adieu to the rather wild ride that was 2023, let's take a spin through the surprising, marking, and downright bizarre stories that shaped our world in this, the 15th year of our pseudonymous lord, Satoshi Nakamoto.?

From justice served on bad actors and failed government power-grabs, to veritable tipping points that will surely reverberate in history as epochal changing of tides: the pendulum swung! This year has been truly replete with stunning wins, embarrassing reckonings, and always, more uncertainty as to what lies ahead.?

Without further ado, let’s review, from least to most important, the top 10 crypto events of 2023.

10) FASB Changes Accounting Rules for Digital Assets

In a stunning yet inevitable turn of events, the importance of which most likely won’t truly be felt for a few more years to come, the Financial Accounting Standards Board officially changed the way Bitcoin (and other digital assets) can be accounted for on the books of publicly traded corporations. This was low-key–and time will tell–one of the industry’s biggest wins of the year, and it’s only #10.

Here’s what this means:

FASB is the Board which oversees accounting and financial reporting guidelines in the US, known as GAAP—or Generally Accepted Accounting Principles. But here’s the thing—these aren’t just guidelines according to the SEC: they are rules, and no accounting firm will look at your publicly traded—or private, for that matter—books unless you comply with said rules. The SEC goes further: if you do not comply, you are out of compliance. Well up until recently, because Bitcoin wasn’t generally recognized as the stalwart, decentralized and non-sovereign energy-based commodity that it is today, FASB’s GAAP considered it an Intangible Asset. (Much to MicroStrategy's dismay–they hold something like 165,000 BTC on their—public, ticker MSTR—books.) Until they are sold, Intangible Assets can only be marked down, in value, and not up. So if you hold a ton of BTC on your balance sheet and as BTC is wont to do, its value plunges 70 percent, Fazbee says: “Too bad, so sad, better luck next time”. This was until the FASB recently voted to change the GAAP rules to consider BTC eligible to be marked to market every quarter, like treasuries, stocks or commodities. Huzzah!

9) Bitcoin Hat-trick: Hodlers, Hash and …Hadoption?

When the industry was all but left for dead on the side of the road by the mainstream media, institutions and in certain cases our parents, and Bitcoin critics and politicians took victory laps around our quieter-than-usual BT (Bitcoin Twitter) profiles, something far more interesting (and a touch less creepy) was taking place: People were using this downtime to learn about Bitcoin.?

One week after some of the largest publicly traded Bitcoin Miners in America were filing for Chapter 11, Bitcoin’s hash rate (a measure of how much computing power is being thrown at our glorious, sovereign, decentralized network at any given time) was already making new ATHs (all-time highs). Big ouf. A few other records were being broken, too:

The number (and percentage) of coins being held in wallets with a history of not selling for over a year. Halfway through 2023, more than two-thirds of Bitcoin’s supply was in the hands of die-hard hodlers. By the end of 2023, LTHs (Long Term Hodlers–their official nomenclature) were taking over $1.5B worth of bitcoin off the market every month. This is historically unseen in Bitcoin, or–for that matter in the history of the world–in any other physical commodity or financial asset, bar none.

Finally, while Bitcoin’s “peer-to-peer cash” narrative/use case died a slow death, its second layer scaling (and–duh–payment) solution, The Lightning Network (LN) was assuredly not: The numbers were in and–though they aren’t exact, since much of the LN’s traffic, usage and liquidity happens off-chain (that’s sort of the payment-and-privacy point!)–they were… electric (hehe). In October 2023, over the previous two years, Bitcoin’s main layer-2 scaling/payment solution the LN, according to River Financial; had routed transactions skyrocketing from 503,115 in August 2021 to 6,599,553 in August 2023, representing near-vertical growth of 1,212%.

See, Mom and Dad? Maybe your son isn’t crazy after all.

8) The SEC Takes A Partial L Against Ripple

On July 13, a US judge partially ruled that Ripple did not sell unregistered securities… While the verdict was admittedly a little confusing (the XRP which was sold to institutional investors directly by Ripple executives was a sale of unregistered securities, but those of Ripple’s XRP tokens which were distributed to the public via crypto exchanges… were not? Be that as it may, this was an important day for crypto at large because it directly challenged current SEC Chair Gensler’s assertion that basically, all crypto except for Bitcoin is ostensibly an unregistered security. And what happened when the SEC tried to appeal this court’s decision? De. Nied.

7) Code as Free Speech (No longer): Tornado Cash

Pour out some of that end-of-year celebratory champagne for our fallen comrades. Nobody in our industry–despite what Liz Warren will have you believe–likes when a criminal uses freedom technology to do bad stuff. But just like no one can tell anyone what to do with cash, so is the case with most public and open blockchain networks.?

Tornado Cash was originally developed as an open source, free and replicable protocol (i.e. Code, protected as free speech in at least the US between the 70s and 90s, thanks to the work of Bitcoin’s precursors, the fabled Cypher Punks) for Bitcoin users operating under oppressive regimes to make anonymous transactions. You know, so the dictators couldn’t trace payments back to dissenters… Well, it didn’t take long for bad actors like North Korea’s Lazarus group to start using Tornado Cash to launder ill-gotten gains, either. (Cash–you don’t blame it because bad people use it; it’s neutral technology.)?

Anyway, one core developer of Tornado Cash was arrested in the Netherlands and 3 more were subsequently charged by the DoJ with operating a money laundering operation. No bueno. The Treasury’s enforcement arm OFAC (Office of Foreign Asset Control) outlawed the code–despite, again, code being protected under the First Amendment–and, well, no one wants to mess around with OFAC and find out. This has of course been challenged in court by the Blockchain Association, to no avail. This story is developing.

6) Bitcoin as Sovereign/Corporate Treasury Reserve

While in 2021 the United States was confiscating foreign treasuries from foreign regimes it disapproved of, another treasury asset was being adopted… Bitcoin. Publicly traded corporations like MicroStrategy, Jack Dorsey’s Block and Elon Musk’s Tesla were adding it to their corporate treasuries. And nation states like Bhutan, El Salvador, and perhaps a few others we haven’t heard of (yet…) were doing the same. Cities, States and Provinces the world over also began actively accumulating–or ideating plans to–follow suit.

And while for most of 2023, many of these entities were suffering the slings and arrows of mass media ridicule, they all ended the year in the black, and in some cases, very profitably indeed. El Salvador hilariously came out in December and straight up asked for retractions from all the media companies which had disparaged their decision to do so. We’re still waiting for those retractments! This leads us to #6…

5) Argentina Elects Pro-Bitcoin President “El Loco”

You’ve all heard the story. Argentine: Formerly one of the most resource-rich nations in the world, descends into decades of economic turmoil punctuated by no less than 12 interventions by the IMF (International Monetary Fund). When a successful entrepreneur/saver/worker in Argentina is only as good as their ability to maintain their purchasing power in the face of rampant inflation and government dysfunction, what else is a nation to do but try something drastically different?

We’ve all heard Einstein’s definition of insanity, and Argentines are not insane. Instead of voting for more of the same hoping for a different outcome, they finally opted to give their so-called populist presidential candidate (aptly nicknamed) “El Loco”–a former footballer-cum-rockstar-cum-2-decades-long-economics-prof Javier Milei, a kick at the can. Milei is of course (in)famously pro-bitcoin, describing it as “the private sector’s answer to the scam of central banking”. Milei has a huge task ahead of him–whatever path he chooses to pursue–with very little legislative support, and we wish him and all Argentines the best of luck of 2024 and beyond.

4) ‘Arbitrary and Capricious’: Grayscale Clobbers SEC

Opening the door to a conversion of Grayscale’s (closed-end) Bitcoin Trust into an (open) Spot Bitcoin ETF, D.C. Circuit Court of Appeals Judge Neomi Rao ruled that some of the SEC's arguments in rejecting Grayscale’s Bitcoin ETF conversion bid seemed "arbitrary and capricious." After Grayscale’s lawyer Donald Verrilli Jr. (who served as solicitor general of the US under Obama) argued that the regulator had no basis to reject its bid to convert their Bitcoin Trust into an ETF, Rao invalidated the SEC's reason for rejecting Grayscale's application… Hot diggety!?

In essence, the point of the lawsuit was that the SEC’s stated reason for rejecting Grayscale’s application was that their ETF proposal wasn't "designed to prevent fraudulent and manipulative acts", yet the SEC had previously approved market manipulation safeguards for other BTC futures ETFs, which Grayscale's proposal met, hence the whole “arbitrary and capricious” soundbite. The court agreed that Grayscale’s safeguards were sufficient.?

The SEC had 45 days to appeal the ruling, which they did not, and last we heard in Early December, Grayscale was meeting with the SEC to tie up loose ends before an ostensible ETF approval in early January, an outcome to which Bloomberg analysts are ascribing odds of 90%.

3) Sam Bankman-Fried Guilty

Few outcomes could have been more disastrous for our industry–dare I say, the collective morale of the continent–than any outcome other than “Guilty on all charges”. The FTX and Alameda Research founder’s wanton disregard for any of the principles that underpin the entire foundation of our financial–and societal–structures was laid bare for all to see: He used everyone and anyone’s funds as his personal petty cash box, and, not unlike the narcissistic toddler that he was revealed to be, lied, cajoled, cheated, ‘charmed’ bribed or manipulated when confronted with his less than ethical behaviour.?

Plus, during the much-ballyhooed trial, it came out that while SBF not only wasn’t holding bitcoin for his exchange users who’d thought they bought it, he was actively using users’ deposits (fiat and bitcoin) to short bitcoin, thereby suppressing its price–during certain prolonged periods, to the tune of more than the total newly minted supply making its way onto the market!–to prop up the prices of his own pet crypto projects. Truly incredible stuff.

His conviction breathed a sigh of relief in an industry already weighed down by almost 2 years of existential attacks from all sides. Good riddance to “ethical altruism”, so long SBF.

2) Bank of Canada’s Research into A Digital Dollar

Considering the Government of Canada was shutting down protesters’ bank accounts in 2021–something that to this day–when told with a straight face–most of our G8 counterparts sort of just stare blankly in disbelief when they hear it; ostensibly the next greatest ‘financial repression’ type of fear harboured by Canadians was money that could force us to do what it wanted us to do… Or wouldn’t allow us to do what we wanted to. This after all is the prerogative of any programable money, especially one issued by a state; the CBDC (Central Bank Digital Currency).

Fortunately for us, Canadians are far more financially savvy than certain prime ministers give them credit for… In a survey of over 89K canuck respondents–three quarters of which were far more than High School educated–9 out of 10 respondents said they didn’t trust the Bank of Canada to issue or manage such a currency, 85% said they wouldn’t use it, and before you ask, it seems most respondents were already very well aware of what a CBDC does and how its power can be abused... Canadians to the Bank of Canada: “We see you–back off”.

1) Bitcoin Soars While Banks Collapse

If it weren’t for the world’s largest asset manager taking to Fox Business to extoll the virtues of Bitcoin–a technology he labelled a tool for criminals and money launderers just a few short years prior–this would have been my top story of the year.

In the past, anytime there was a global market scare, or rush to liquidity, the first asset to get sold downriver was the Bitcoin. But in late winter 2023, when a ton of shady goings on put the control of no less than 4 banks in the hands of Uncle Sam, and these bank stocks were selling off as their holders ran for the exits… What was Mr. Bitcoin doing?

He was flying off the shelves. It was hard enough to deny the effectiveness of the narrative when Bitcoin was rallying as Fed Chair and Treasury Secretary and Commander in Chief of the US Army stood before us on television telling us that every was going to be alright… But when CNBC was commenting on it as well? Emotional damage.?

We truly turned a lot of corners as an industry, and as an asset class, in 2023. Bitcoin starting off the year strong, and continuing to rally in the face of global financial chaos? It cemented this turning of corners and took the cake. (A beautiful cement turning-of-corners cake with/ 21M candles on top.)

0) Larry Fink, Moon Boy

Need. We. Say. More. Larry Fink is the founder and CEO of the world’s largest asset manager Blackrock. It is estimated that due to their control of massive American stock index funds (iShares ring a bell?), Blackrock’s influence in the corporate board rooms of America is unparalleled. They made waves when they applied for a Spot Bitcoin ETF (well, sort of ETF) this year, and if their track record is any indicator, they have a pretty good chance of getting approved.?

Larry Fink is also famously–if not its emperor–the world’s ESG tsar. So his endorsement (for all of us who’ve been screaming on deaf ears for the last half-decade that Bitcoin is actually good for the environment) came as a welcome bit of vindication.

When at first we wondered if Blackrock’s filing of a Bitcoin Spot ETF application was somehow a… mistake… Who made an appearance on prime-time news to set the record straight? Blackrock’s head of PR? Greta Thunberg? Ok. Blackrock’s head of marketing? Blackrock’s CIO? NO, DEAR FRIEND–It was Founder and CEO himself, in the flesh (and in a fine tailored suit, if we may) wearing very little TV makeup and most importantly, brilliant beaming laser eyes. Of Bitcoin, he said:

“The technology is fantastic. The role of crypto—it is digitizing gold, in many ways. Instead of investing in gold as a hedge against inflation (…) or the devaluation of your currency—whatever country you’re in. Let’s be clear, bitcoin is an international asset. It’s not based on any one currency and so it can represent an asset that people can play as an alternative. I would call that the foundation of Blackrock is about: Hope. You invest for retirement because you believe tomorrow is better than today.” He said. “We hope that our regulators look at these filings as a way to democratize crypto and we'll see in the future how that plays out. We work really closely with our regulators, and we want to hear from them what are their issues and how can we fix those issues”.

And on that note, dear valued NDAX users, hodlers and traders, dreamers and savers, we leave you with the wise word of (most of) our community’s hardest proponents–an outcome which Bitcoiners and Blackrock (and us, here at NDAX as well) are working hard to bring about: Hope.

Happy Holidays and to all a great year!