Fortunafi's State of the Industry 1Q2023 Report

Another blow-out quarter for RWA and stablecoins proves that adoption & innovation is just getting started.


Following the bear market of 2022, 1Q2023 kicked off on a bullish note amid a global rally in risk assets. A revival in crypto demand followed year-end forced selling, tax-loss harvesting, a market-wide short squeeze, and a wave of optimism following pro-crypto regulation out of Hong Kong. As a result, BTC soared to $25K before plunging more than -20% in early Mar. 2023. Market-wide softness coincided with equities slipping amid hawkish commentary from Fed Chairman Jerome Powell. With a hotter-than-expected inflation reading and a robust job market earlier in the market, Powell reinforced his belief that the Fed’s job “is not yet done,” thereby driving market participants to unexpectidly brace for more hikes than initially thought. However, a shift in trend came about as markets found a local bottom after a series of bank failures drove the Federal Reserve to take quantitative-easing-like actions to backstop the U.S. financial system - causing market participants to price in interest rate cuts later in the year.

Crypto also felt the brunt of anti-crypto regulatory actions in the U.S., like the SEC sending Paxos, the issuing entity behind Binance’s BUSD stablecoin, a Wells Notice for violating investor protection laws and Kraken ending support for U.S. staking after completing a $30M settlement with the SEC. As Mar. rolled around, market participants became fearful after news broke that two crypto-friendly banks had ceased operations; on Mar. 8, 2023, Silvergate Capital Corporation, the holding company of Silvergate Bank, announced a wind-down of operations and a voluntary liquidation due to “recent industry and regulatory developments.” Two days later, the FDIC shut down Silicon Valley Bank after the bank tried to persuade clients not to withdraw funds. Not long after, Signature Bank followed suit.

Source: TradingView

Notwithstanding 1Q2023 ending on a disappointing note, Real World Assets (RWA) and stablecoins had a plethora of positive market developments that took the industry by storm. RWA especially was of considerable discussion among market participants in 1Q2023, with the promise of real world asset tokenization disrupting traditional financial markets permeating across all corners of crypto. Also, a handful of government institutions praised the potential of asset tokenization, and several protocols announced new support for RWA and stables. Despite the market’s headwinds, 1Q2023 was another needle-moving quarter for both sectors.

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Each quarter, we provide a comprehensive breakdown of what happened within the world of RWA and stablecoins so market participants can remain informed and educated. Not only that, but we also provide a detailed outlook of what to expect in light of ongoing market developments.

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Disclaimer: The information contained herein is general information, intended for educational purposes only, and is not intended to constitute legal, tax, accounting, or investment advice. Information, opinions and views are solely of Fortunafi and none of the information contained should be used as the basis for an investment decisions. To ensure suitability, contact a licensed investment professional when making any investment decisions and do your own research.afi