The past 12 months have seen as active a year as any other in the payments and fintech space. Reflecting on 2023, Payment Expert highlights some of the defining events which shaped the fintech headlines.
Legal chaos continued in the crypto space this year, chiefly spearheaded by the fallout of the FTX collapse as the exchange’s Founder awaited trial in the US. Facing additional charges in the Bahamas, Sam Bankman-Fried called on the country’s Supreme Court for a dismissal, but to no avail.
Meanwhile, amid a worsening situation for Binance – the world’s biggest crypto exchange in terms of trading volume, with FTX having held the third place spot until its November 2022 meltdown – global payments leader Mastercard opted to cut ties with the firm.
Negative publicity has fueled continuing governmental and regulatory scepticism of the crypto sector – notably, US President Joe Biden asserted at a G7 meeting in Japan that he intended to clamp down on cryptocurrency tax loopholes present in America.
However, 2023 did not only feature negative headlines about crypto and digital assets. Various financial stakeholders have recognised the sector’s place in the global economy.
In May, the Bank of Canada would launch a consultation on the creation of a digital Canadian dollar, and two months later the Bank of Spain would eschew the benefits of a digital euro to the European Central Bank (ECB).
The Bank of England also began to probe the prospect of a British Central Bank Digital Currency (CBDC), arguing that the creation of such an asset is “likely to be needed in the future”.
Crypto, particularly the regulation of the sector, was a major talking point in British finance throughout 2023. In June, the The Financial Services and Markets Act 2023’ was given Royal Assent, seeking to address the role of crypto in the UK economy.
The legislation set out to create an ‘open, sustainable, and technologically advanced financial services sector’. Andrew Whitworth, Policy Director for EMEA at Ripple, explained to PE: “The process to get to this law has been well run and establishes the UK as a frontrunner when it comes to attract crypto and blockchain businesses from around the world.”
In a further boost to the cryptocurrency sector, long-running calls from some observers for crypto to be treated as a form of gambling in legislation – due to the volatility of markets and potential for heavy losses from investors – were rejected.
Economic Secretary to the Treasury, Andrew Griffith MP, asserted to the Treasury Select Committee – the group of MPs which made the crypto/gambling comparison – that he ‘firmly disagrees’ with their assessment of the market.
In the face of regulatory debates, public engagement with cryptocurrency is rising across the board according to market statistics. This was shown in PayPal’s Q1 2023 results, which showed a notable increase in cryptocurrency deposits among the platform’s customers.
Blockchain and crypto are of course not the only technologies which have left a mark on the fintech and payments sectors in recent years, however, with AI perhaps one of the biggest talking points of 2023.
AI has been a huge buzzword this year, being adopted by a range of economic segments and individuals from betting firms to financial institutions to artists, and social media platforms such as Meta.
Much like its counterpart in crypto, AI did not have an entirely smooth run in 2023, however, with OpenAI – developer of the hugely popular ChatGPT chatbot software – hit with a class action lawsuit alleging theft of private data.
Amidst concerns about the potentially risky consequences of AI, this has not deterred stakeholders from the high echelons of finance to the halls of government from probing the benefits of the tech for the economy.
In June, UK Prime Minister Rishi Sunak spoke at the London Tech week, stating that he wants to ‘make this country one of the best in the world for tech’ – and cultivation of a strong AI scene is central to the government’s plans.