ForkLog spoke with experts about the main cybersecurity threats, the most promising coins, and new likely bankruptcies of crypto projects in 2023.
On crypto market trends
Sergey Mendeleev, CEO of Indefibank:
One of the main trends for 2023 that will determine the entire direction of the crypto industry is the development of stablecoins and regulators’ response. If today everyone looks at Bitcoin’s price and total market capitalization, soon a separate capitalization and daily turnover of stablecoins, as the most practically demanded part of crypto, will be added. I hope regulators do not choke this whole story at the root.
Andrey Velikiy, co‑founder of Allbridge.io:
There will be a cleansing of business models — fewer castles in the air, more concreteness; attention to the number of real users, transactions, product usage, and its product‑market fit. Overall the market will become tougher.
Mikhail Chobanian, founder of Kuna:
The market will abandon everything inefficient: pyramids, inflated promises and expectations. Everything that did not work and was waiting for growth somewhere in the future, during this crypto winter will die, and the market will gradually clear itself.
On Regulation
Mikhail Chobanian, founder of Kuna:
The trend of tightening AML/KYC will require more information from clients. All this will lead to exchanges effectively being regulated like banks. In 2023 we will already see a tougher shift toward banking regulation.
Sergey Mendeleev, CEO of Indefibank:
When it comes to global regulation, regulators will keep tightening, the question is by how much. If we talk about a total tightening of AML/KYC procedures — that’s half the problem; but if they start banning entire technologies (DEX mixers or algorithmic stablecoins), that would be, of course, unfortunate. I hope it will be avoided.
Andrey Velikiy, co‑founder of Allbridge.io:
Regulators will do more, bans will be greater, audits and attention from authorities as such. Already today Canada prohibits margin trading, imposes limits even for qualified investors, and this is only the first sign. Against this backdrop I forecast a new wave of DeFi development, as those who want will not go anywhere and will seek alternative ways.
Andrey Tugarin, managing partner of GMT Legal:
The entire market, almost irrespective of geography, awaits strict regulation in countering money laundering and the financing of terrorism.
For participants this means that all entry points into digital assets will be regulated more closely by both the business itself and the regulator.
For example, across the EU there are plans to restrict cash purchases of digital assets and carefully monitor cryptocurrency transactions. A cash threshold will be set, above which a user will be able to buy crypto.
Top-3 goals that regulators across countries, including the US and EU, aim for:
- to ensure uniformity in the digital sphere;
- to form a single approach to regulating cryptocurrencies;
- to develop universal standards for user protection.
We can see this in a document that will be highly consequential for the market in 2023: the European MiCA and the American Lummis-Gillibrand Act.
Expect a clearer and more understandable separation of tokens by their function.
A separate hit will be on stablecoins. Today payment-stablecoins operate outside clear, transparent regulation, driving some states up the wall and, in some cases, leading to swift shutdowns of businesses.
Plans to heavily load obligations on issuers, including:
- maintaining reserves in high-quality liquid assets, valued at 100% of the nominal value of all circulating payment stablecoins;
- providing public disclosure of assets;
- obtaining permission to operate;
- developing an individual plan for bankruptcy;
- undergoing regular audits;
- own capital of at least €350,000 or 2% of the average reserve assets (for the EU);
- ensuring every holder can redeem their stablecoin at its nominal value at any time.
This trend is directly tied to achieving one of regulators’ main goals — to develop universal standards for user protection.
On potential high-profile investigations
Andrey Velikiy, co‑founder of Allbridge.io:
I expect another wave, as a consequence of recent events related to FTX, followed by a period of recovery and then a return to cautious optimism about crypto.
Right now it’s somewhat embarrassing to talk about work in our field; amid streams of negative coverage, people have formed a firm view that it’s all bubbles and scams.
Mikhail Chobanian, Kuna founder:
I think the FTX bankruptcy with the help of Binance will not be let go by Americans easily. Therefore, next year we may see some culmination: either Binance wins against the US, or the US will block it or take Binance under total control and CZ.
This is the biggest player on the scene today. If you trust CoinMarketCap volumes, Binance is a significant monopolist. Only a bankruptcy of that sort could affect the market; others, as we see, have little influence.
Sergey Mendeleev, CEO of Indefibank:
I really hope that the negativity from Luna and FTX stays in 2022 and that we won’t be rattled by new collapses in the industry. But life can throw any surprises at any moment. After all, crypto is such a thing.
Andrey Tugarin, GMT Legal:
One of the scariest scenarios for any project is the recognition of a token as a security and, as a consequence, delisting from an exchange. The exchange itself also suffers from this.
Thus the sharpest risk in 2023, considering legislative trends including the US SEC, is the designation of most tokens in circulation as securities.
We don’t need to dive into the laws to understand the scale of consequences. It suffices to watch the progress of SEC vs. Ripple Labs and, as a result, the determination of the legal nature of XRP. The outcome of this case will set a precedent with legal force under US law and could be applied to other companies.
On the crypto market in Ukraine
Andrey Velikiy, co-founder Allbridge.io:
If regulators do not interfere, it will develop well.
We already see a sustained trend away from blockchain outsourcing toward product‑focused companies. I expect this to strengthen, especially when technically strong teams master the basics of business and project promotion (in a good sense, not in terms of shilling).
Mikhail Chobanian, Kuna founder:
My market outlook for Ukraine is very pessimistic.
Crypto in Ukraine will not develop under the current economic conditions. We see little relief from the National Bank, the tax authorities, or supervisory bodies, which have started roaming again.
Therefore the economy will contract, and with it the crypto market in Ukraine. No major developments will occur inside the country because almost all major players have already left, many even before the war began.
Events are not progressing much, because it is simply impossible due to air raid alerts or lack of electricity.
The community is not developing: it does not thrive in its own ecosystem; new top speakers, teams, and ideas do not come here.
Consequently the market will, unfortunately, deteriorate. It will continue to fall at least until the end of the war, or ideally until the situation in the country changes and we finally begin to develop the economy rather than stifling it.
On the crypto market in Russia
Sergey Mendeleev, CEO of Indefibank:
Talk about crypto prospects in Russia will be possible only after the final edition of the regulating federal law is adopted. I don’t have much faith, but I hope the lawmakers have enough sense not to ban circulation. But even if not, we are ready for any scenario.
On the development and regulation of crypto wallets
Ksenia Zhitomirskaya, CTO of Trustee Wallet:
A sharp rise in interest in the crypto industry from ordinary people is very likely in the near future. Therefore, in the coming years we expect a significant influx of newcomers — people who have no knowledge of crypto.
The key need of such users is to obtain a truly intuitive, convenient and accessible tool and the ability to buy crypto in a few steps, without being distracted by learning the principles of how cryptocurrencies work.
As a result the developer faces a non-trivial task — to provide users with exactly such a tool and not to “force” them to understand terms like “protocol fee,” “native coins,” and so on. Provide a truly simple tool, not a “dashboard for a spacecraft.”
Based on years of experience with Trustee’s users we clearly split the audience into two groups: more advanced users needing a decentralized wallet with direct access to DeFi services, and newcomers. They are mainly interested in investing in crypto and a simple interface.
The crypto industry is growing and every year takes a larger share of the global financial market. In this regard regulators, developers, and users will have to find ways to interact and compromise on future joint work.
We all know regulators want to take everything under control and they would have done it long ago if it were not difficult.
In the near term we do not expect direct opposition to the spread of crypto wallets, but there are risks, of course.
In the longer term it may turn out that fully anonymous coins will be squeezed out of reach of regulators, which will clearly affect their development, while pseudo‑anonymous ones will be marked by more than 90%. This could lead to total pressure on wallets and developers to implement KYC.
We have action plans for all such scenarios and none of them involve risks to user assets being blocked.
On mining
Roman Nekrasov, co‑founder of ENCRY Foundation:
The main trend next year is the continued relocation of miners across the world map.
The share of Kazakhstan will grow as an optimal location for launching mining farms in terms of regulation and electricity costs.
The share of the United States will also grow; Americans have every chance to pull ahead. In Europe, due to the energy crisis, mining will stall completely, but it already does not hold a significant share on the world market.
It is interesting what will happen in China with covert miners who continue to operate there. China does not need crypto miners now; it needs to promote its digital yuan domestically and internationally.
Prices for equipment have already fallen fairly well over the past year; the crypto winter makes its adjustments. But in Russia next year the decline is unlikely to be strong, except for used models that are already in the country.
Globally the situation will be different; there will be a continued decline against low crypto prices and falling demand in the absence of supply problems.
Mikhail Berezhnev, co‑founder of 51ASIC:
The short list of preferred mining jurisdictions now looks like this — Kazakhstan, the United States, Russia (with caveats on country risks).
Kazakhstan is currently the most attractive due to the combination of these three factors: a developed regulatory framework soon, attractive electricity costs. Yes, a license is required, but obtaining it cannot be called insurmountable.
The United States also attracts miners — there are favorable electricity tariffs, not as in Kazakhstan, but still favorable. The main advantage of the United States is the enormous capital market, which naturally trusts companies incorporated in the US.
Miners require investments no less than electricity. In Russia there are excellent climate conditions, electricity tariffs, but geopolitical conditions create country risks that hinder the inflow. They reasonably fear that selling coins mined in mining centers on Russian territory could cause problems.
On cybersecurity and freedom of speech
Dmitry Budorin, CEO of Hacken:
The most significant threats from historical data are private key leaks, bridge hacks, and oracle attacks: price oracle attack, flash loan attack.
The main vulnerabilities will most likely remain, since projects often take a lax approach to secure key storage and timely audits of smart contracts.
Projects must undergo audits not only once before launch but also after each update or minor change; any change can create a critical security threat. Example, hack of the DeFi protocol Team Finance.
Because many projects do not conduct repeated audits after updates or changes to smart contracts, we see a large number of hacks in the last year.
We are moving toward automation of threat detection and prevention before they can turn into funds stolen from a protocol.
Many companies, including us, are working on threat-monitoring and response before an attacker wallet interacts with clients’ smart contracts. Pauses and blacklists at the smart contract level will become the new norm.
To ensure the security of crypto payments I believe it is necessary to implement at least the above solutions. They will significantly improve the efficiency and speed of audits for projects. They will also help projects prevent hacks or minimize their damage by acting promptly.
An important issue is auditing assets and liabilities of crypto exchanges and other products acting as custodians for client funds — stablecoins, bridges, staking- and farming-aggregators with wrapped assets, custody wallets, the so‑called Proof-of-Reserves audits. There will be services that allow verifying assets and liabilities of companies. Those who cannot prove solvency will face the fate of FTX. Expect many new bankruptcies next year.
Artem Kozliuk, head of “RosKomSvobody”:
One of the sensitive and important topics is personal data and biometrics. How to protect business and clients from leaks. Soon fines will be introduced and the issue will become acute.
We see that almost every week huge databases with various information about people — their passport data, phone numbers, addresses, medical and banking data, their preferences in food, travel, locations — leak to the black market. Even more alarming is that data about children leaks, including from government databases.
Clearly there is a large gap that neither business nor the state can effectively close. Moreover, by collecting biometric data in various areas, the state creates even greater danger for people, while barely protecting them.
A separate issue is the continued deployment of facial recognition systems uncontrolled by society. As a result there are significant risks of misusing sensitive data by government bodies, business, and crime.
The situation with freedom of speech will worsen almost everywhere. Some places very aggressively, as in Russia; others less so, under the banner of protecting certain social groups or the need for one‑sided interpretation of events.
But of course, what is happening with the attack on media, journalists, bloggers, musicians, writers, scientists, ordinary people by the Russian state — this has already crossed all permissible boundaries.
Nevertheless, authorities year after year find new pretexts to further curb freedom of thought. Yet in such conditions creativity flourishes anew.
For example, new activist art groups appear that tackle current social projects, musicians reevaluate their role and creativity. These are shoots that will, in the future, triumph over the gray, multi‑layered asphalt.
On Bitcoin price and promising coins
Anton Kravchenko, algorithmic trader:
In the market in recent months the situation has been very volatile because of FTX, Genesis, Celsius and others, while Bitcoin remained above $16,000. At roughly the same price, many miners break even. This indicates the market has potential to reverse at this point and move back to higher levels.
As usual, investors’ main attention now is on Bitcoin and Ethereum. When they reverse and start rising, attention will shift to the next assets with high growth potential.
Against the backdrop of big problems in centralized solutions, the following look strong:
- Polygon (MATIC), as a second‑layer solution for Ethereum;
- Polkadot (DOT), as a very strong Web3‑focused multi‑chain team;
- Avalanche (AVAX), as a blockchain for financial solutions;
- NEAR Protocol, as a strong alternative to Solana with horizontal scaling.
Andrey Velikiy, co‑founder of Allbridge.io:
Promising tokens are those backed by healthy business models.
On Bitcoin and Ethereum I expect another move down to accelerate capitulation, but then values will be significantly higher than today on a yearly horizon.
With concrete numbers — that’s more for psychics and admins of signal channels.
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