The appetite for cryptocurrency in the institutional realm extended beyond large funds and accredited investors in 2023, with significant efforts from major companies, banks, and even governments to create their own digital currencies. Reflecting on the year’s developments in the crypto space as it comes to a close offers a valuable perspective on the progress made.
A notable trend of 2023 was the eagerness to launch corporate stablecoins. These digital currencies, pegged to stable assets, became highly profitable due to their ability to invest non-interest-bearing deposits into high-liquidity, short-term strategies. The most high-profile corporate stablecoin launched was PayPal’s PYUSD, introduced on August 7th in partnership with Paxos.
Despite not following an aggressive marketing strategy, PayPal’s PYUSD quickly reached a market value of over $150 million, making it into the top 20 stablecoins. In September, PayPal announced the integration of PYUSD with Venmo, potentially increasing crypto engagement among its vast user base in the future.
On the Central Bank Digital Currency (CBDC) front, Turkey had previously announced its testing phase, with concrete steps or test results expected in the coming year. Meanwhile, Project mBridge, a collaborative initiative involving central banks like the BIS Innovation Hub, the Hong Kong Monetary Authority, the Central Bank of the UAE, the Digital Currency Institute of the People’s Bank of China, and the Bank of Thailand, made significant strides in multi-CBDC operations.
China’s digital yuan (e-CNY) saw notable advancements and increased adoption in 2023. Key developments included enhanced accessibility for foreigners to open e-CNY wallets using international phone numbers, innovative payment solutions for transactions without the internet, and the integration of e-CNY into the mBridge project for international settlements.
The UAE continued efforts to integrate its Digital Dirham into the global financial system. Brazil’s Central Bank announced plans to initiate the first phase of DREX (Digital Real) in May 2024. The European Union worked throughout the year on the Digital Euro project, with a decision to launch it pending the establishment of a full legal framework. Lastly, the Monetary Authority of Singapore (MAS) revealed plans for a wholesale CBDC for payments.