Four crypto developments to watch for in 2024

Chris Ratcliffe/Bloomberg

After the spectacular collapse of the FTX crypto exchange at the end of 2022 and the legal and financial fallout that resulted, one might reasonably conclude that crypto’s time was over. But despite ongoing reservations by regulators and lawmakers about the safety and utility of crypto assets, blockchain technology and its adherents are not going away. While Bitcoin’s value has not yet returned to its 2021 record highs of over $69,000, the flagship cryptocurrency more than doubled its value in 2023, and expectations that the Fed will forgo further interest rate hikes in the near term could draw investors toward the riskier asset in 2024.

But while crypto may have moved past the FTX era, the Treasury Department’s recent record fine against Binance is a sign crypto continues to struggle to shake its association with fraud. The industry continues to petition regulators for written rules of the road, but in a divided government that’s barely able to keep the lights on, legislative clarity remains out of reach. A bipartisan agreement on crypto assets has a shrinking likelihood of passing as lawmakers enter an election year. Further complicating matters, House Financial Services Committee chair Patrick McHenry, R-N.C. — one of Congress’ chief crypto bill architects — is exiting Congress, leaving his crypto legislative drafts with an uncertain future. 

Absent legislation, enforcement by market regulators the SEC and CFTC will continue to focus on regulating major crypto players. Where judges side in the ongoing legal battle between the SEC and Ripple, along with ongoing cases against Coinbase, Binance, and more recently Kraken, may provide the industry some certainty as to the legality of tokens and whether they qualify as securities or commodities. But regardless of the outcome of those cases, the crypto market will remain largely in suspense regarding its regulatory future into next year.

Meanwhile, Regulators are interested in using blockchain technology to make traditional financial asset settlement more fast and efficient, known as tokenization, which could be transformative for financial institutions. Here’s what to watch in the cryptosphere in 2024.