To say the past year has been tumultuous for crypto is an understatement. Through it all, we at Beyond Enterprizes have been taking notes. Let’s review some of the most momentous turns of events.

Coming Down to Earth

After a monumental bull run in crypto, with Bitcoin at an all-time high of almost $69,000 in November of 2021, the bear market rushed in swiftly, bringing on the chill of a “Crypto Winter.” This deepened, in early 2022, corresponding with rising interest rates by the Federal Reserve and its efforts to curb double-digit inflation rates. Assets considered to be higher risk, such as cryptocurrency holdings, were hit the hardest. Opening the new year at just over $47,000, BTC signaled the downturn of the crypto market.

Funding the War Effort in Ukraine

The use of crypto as a way of contributing to a cause emerged once more as the Russia-Ukraine conflict became front-page news, globally.

In just days after the Russian invasion on February 24th, 2022, the government of Ukraine’s official Twitter account requested BTC and ETH as donations, including wallet addresses. The tweet was first met with skepticism. Vitalik Buterin publicly warned that the account may be hacked.

However, Ukraine’s Ministry of Digital Transformation swiftly confirmed the request as legitimate. Within three days, the Ukraine government had received over $30 million in BTC, ETH, DOT, and other cryptos donated by generous supporters.

A Rough Moon Landing

In May 2022, the popular “Terra powered by LUNA” project, consisting of an algorithmic stablecoin, TerraUSD (UST), and governance Terra token (LUNA) crashed. The respected decentralized stablecoin, UST, pegged to the US dollar, had once reached an all-time high of $1.09 maintaining this for over a year, before a virtual bank run drove its price down to a few cents. Its sister coin, LUNA, had reached an all-time high of $119. Sadly, it quickly lost all value, as investors rushed to liquidate their holdings of both coins. Subsequently, the entire cryptocurrency market lost $600 million in a single week with the price of BTC and ETH dropping over 50% from all-time highs.

Certain Centralized Finance Firms Declare Bankruptcy

On July 1st, 2022, prominent Singapore-based crypto hedge fund, Three Arrows Capital, sometimes known simply as “3AC,” first filed for protection from creditors in the U.S. under Chapter 15 of the U.S. bankruptcy code. This allows debtors based outside the U.S. to shield their U.S. assets. The firm was heavily impacted by the collapse of the aforementioned Terra LUNA project in May.

The bear market, lack of liquidity and the possibility of unsound practices in crypto lending, borrowing, yield-earning and more continued to take their toll on centralized finance institutions, as some began freezing customers out of their accounts. The first major platform to declare bankruptcy was Toronto-based Voyager Digital Ltd. on July 5th, following withdrawal and deposit suspension for customers. It is estimated that Voyager is over $1 billion in debt.

Quickly following this, on July 13th, 2022, the popular Celsius Network, based in New Jersey, filed for chapter 11 bankruptcy. It is estimated that Celsius owes customers about $4.7 billion.

Ethereum Upgrades

Crypto received some good news in September of 2022 with a much-anticipated upgrade to the Ethereum network. With the success of “the Merge,” toward ETH 2.0, Ethereum was taken from its energy dependent proof of work (PoW) method of validation to the environmentally conscious proof of stake (PoS) mechanism. In time, the upgrade to PoS is expected to dramatically increase the Ethereum network’s scalability while decreasing its energy use by 99.95%.

Progress for Crypto Regulations

2022 proved a notable year for much awaited regulation worldwide, as various laws passed in several regions to clarify how blockchain technology based digital assets might be better understood and used by institutions and individuals alike. Definitions of certain assets still remain in question as the process continues in various directions in different jurisdictions.

The United States’ Securities and Exchange Commission (SEC) has begun enforcing regulations already in place. In September, Gary Gensler, SEC chair, stated that most cryptocurrencies are actually securities, with the exception of bitcoin, which is considered a commodity. The use of a central bank digital currency, or CBDC, was recommended. The already existing FedCoin has now been funded for further development as a viable CBDC.

Europe saw more defining regulations for the industry, the Markets in Crypto Assets Regulation (MiCA) bill was passed in October of 2022. Considered by some to be landmark legislation, it aims to define and regulate the digital assets market closely, but will not become effective until 2024. The British Parliament also passed new legislation, as it officially recognized crypto assets to be regulated financial instruments in a draft bill extending current laws to include stablecoins. The move comes shortly after the appointment of Rishi Sunak as the U.K.’s new prime minister, seen by many as “crypto-friendly.”

In late November, the Chamber of Deputies of Brazil approved a regulatory framework legalizing cryptocurrencies as payment there. This move, however, does not make any cryptocurrency legal tender, as is the case in El Salvador, but may increase adoption of crypto in Brazil.

Central Bank Digital Currencies Continue

China, the first country to announce its state created digital currency, otherwise known as its CBDC (Central Bank Digital Currency), launched initially in 2020, and moves forward steadily with its digital yuan (e-CNY) program. On April 2, 2022, the People’s Bank of China (PBOC) announced an expansion of the program into eleven more cities in China. These include six cities of the Zhejiang province, hosting the 2022 Asian Games. Chinese citizens may access the currency through a digital yuan app.

India’s central bank launched the retail version of its CBDC December 1st, 2022, on a test basis only. This comes one month after nine selected Indian banks were chosen to test the “e-rupee” for secondary market transactions in government securities.

Just days ago, on December 7th, 2022, the Bank of Spain heard proposals for its own CBDC. The proposal period begins January 31st, 2023, for “financial institutions and technology service providers.”

FTX and its Contagion

Perhaps most negatively impactful of all was the November 11th bankruptcy of celebrity-endorsed, Bahamas-based, centralized crypto exchange, FTX Trading Ltd. and its sister company, crypto hedge fund, Alameda Research. Total losses due to the collapse of these firms, both founded by Sam Bankman-Fried, are still not entirely known, yet up to a million customers might be impacted, according to one document for bankruptcy.

FTX, once valued at $32 billion, was ranked as the third-largest cryptocurrency exchange by volume, and was backed by such well-regarded firms as Sequoia Capital, MultiCoin Capital and even Black Rock.

The well-known, New Jersey-based crypto-lender, BlockFi first paused customer withdrawals on November 11th, the day FTX filed for bankruptcy. BlockFi then filed for Chapter 11 bankruptcy protection itself on Nov 28, 2022, following the complete collapse of the FTX empire.

The U.S. Securities and Exchange Commission with the Justice Department have opened investigations to ascertain if FTX illegally lent customers’ funds to Alameda Research, Sam Bankman-Fried’s crypto hedge fund. The House Financial Services Committee has just scheduled a hearing for December 13th, 2022 examining the FTX collapse.

In Conclusion

Beyond Enterprizes and its projects were not directly affected by these tumultuous events. There is a reason for this. We have been in operation, helping to bring to light blockchain projects of enduring value and innovation since 2012. We have seen trends come and go. We have the experience and tenacity to endure the highs as well as the lows.

We recognize, understand and support ingenuity and integrity in the space, and will continue to do so. We see the need for a symbiotic union between the bold application of technology and the firm foundation of tested, reliable solutions. In this relationship, we know there cannot be a tradeoff or compromise. This is what sets us apart.

We wish you the best in the New Year and hope to share more exciting advancements and celebrations of much-deserved success in 2023. Learn more about us and what we do at BeyondEnterprizes.com.

The Year 2022 in Crypto