2023 Predictions and Trends According to Finance Magnates

After saying an enthusiastic goodbye to 2022 in which market volatility, crypto chaos, fintech layoffs, and the MetaQuotes drama dominated a tumultuous year, it is time to look ahead at what's in store for 2023.

The Finance Magnates newsroom and Intelligence teams took the opportunity over a relatively quiet festive period, to sit down and gave our individual thoughts on the year ahead for the forex, fintech, and crypto scenes.

Sylwester Majewski, Head of Intelligence

Starting with Sylwester Majewski, our stalwart Head of Intelligence, and a veritable font of retail forex and CFDs knowledge. Here's what he had to say about 2023.

Forex Trending Again

With the crypto winter in full swing, more and more investors lose hope for spectacular gains from Bitcoin in the near future. It will be difficult to convince people ‘again’ that Bitcoin will rise to $100,000. This may be a good opportunity for good old forex trading! With central banks trying to curb inflation, all attention should still be on interest rates, which will benefit FX. In 2022, we have seen that some of the currencies may offer large trends and good trading opportunities, without the risk associated with some exotic cryptocurrencies.

Crypto Firms Entering FX/CFD

It may happen, that some of the biggest Crypto exchanges may search for business opportunities outside the crypto realm, especially since it looks like the best days of bitcoin are behind it. How this will happen is an open question. Maybe, we will see some form of new FX-based instruments or very simplified FX/CFD trading.

CFD Traders Looking for Safe Haven

In 2022, we saw the spectacular selloff of Tesla stocks. More than a year ago, shares of Tesla were as high as $400 and now they are approaching $100. But, similar declines were seen with shares of Meta (former Facebook) or to a smaller extent Apple. It looks like after initial interest in shares of ‘modern’ and ‘high-tech’ firms, investors are backing off, almost like they do not believe in their futuristic plans. It reminds us of a sell-off seen on crypto markets. Do we see retail investors moving away from trading instruments that promise a beautiful future? Is there no more hope among investors? If so, that may lead to an interest in safer trading opportunities.

Watch Regulation Roundup: Everything You Need to Know for 2023 from FMLS22

Ben Myers, Editor-in-Chief

Next up, according to age and beauty, is me.

Engagement and Regulation Key to 2023

It was a challenging 2022 for the Retail FX/CFD space for a number of reasons. Trading volumes lowered from the previous pandemic-driven year, and the MetaQuotes bombshell forced brokers to re-strategise operational plans, plus I think brokers will need to keep on their toes this year too.

With recessions, contracting global economies, and the ongoing Ukraine/Russia war, the economic forecast isn't great, to say the least. As FTDs slow (hit an all-time low in 2022) the disillusionment with crypto pushes the new generation of traders onboarded during the pandemic to now become ex-traders. Brokers will need, more than ever before, to look at how clients are onboarded and how they are engaged.

Brokers will not be able to sit on their laurels in 2023. The harsh global economic conditions that scream recession will mean that those in the Retail FX/CFD space will need to work much harder for each client (to onboard and retain) than over the last few years. We may well see more localised branding, improved/additional features, such as copytrading, proprietary tech, as well better education, all feature more this year as engagement strategies are reviewed and prioritised.

Big Regulation Changes in 2023?

We have the highly-anticipated MiCA (Markets in Crypto Assets Regulation) most likely coming into force this year, and I can't help but feel the SEC will do something major as well this year in terms of crypto regulation. This will most likely see brokers ensure their crypto and FX/CFD activities are well and truly ringfenced.

Scrutiny and enforcement of existing laws will continue to be prevalent as it was in 2022 in the FX/CFD scene, and we should see that when ESMA decides this year, as expected, to tighten laws around the passporting of financial services licenses. There may be a tweak or two to MiFid, but nothing major is expected.

However, with the shockwaves of the FTX debacle still continuing, regulation of crypto and the EU introducing some landmark crypto regulation will dominate the year, and who knows, it may even restore a bit of faith in crypto.

Lastly, in the crypto space, we are going to say goodbye to a few big exchanges this year. Be it through acquisition, bankruptcy or something more nefarious, not all the crypto exchanges will survive 2023.

The Next Alpha?

With a saturated European market, brokers should be looking further afield for value. Africa should offer good potential for brokers and payment providers as African economies, some of which are laden with oil, outpace most other global economies. Expect some new licenses or some notable acquisitions in 2023 as brokers look for the next alpha.

Watch the keynote speech: Forex and Crypto Trends 2023

Arnab Shome, Editor

Here are the thoughts of Finance Magnates' very own Arnab Shome, who diligently covers developments in the FX and CFDs industry daily.

CySEC License Will Be on Demand

When it comes to operating a retail FX/CFDs brokerage business in Europe, a Cyprus Investment Firm (CIF) license is everyone's favorite. Several major brokers and even trading technology providers operate from the Mediterranean island. In 2022, many reputed retail FX/CFDs brands, like Swissquote and Equiti, to name a few, also obtained a CIF license to expand their European Union operations.

Despite ESMA's concerns around the supervision of CySEC over the CIFs, the demand for the license is high. And, this year, we might see several other brokers, mostly non-Europeans and from the UK, gaining the coveted Cyprus license; after all, it's the easiest route to enter the EU.

Capturing the Arab World

The interest of retail FX/CFDs brokers in the Middle East and North America (MENA) region remained prominent in 2022. The region has an abundance of wealthy individuals, and the dominance of the Arabic language makes it easier for brokers to expand in the region. Many brokers have gained licenses in the region and strengthened their presence with rampant hiring. In 2023, we are likely to see more global brokers entering MENA.

Proprietary Tech Will Be a Priority

The ban of two MetaTrader apps from Apple's App Store also stirred the FX/CFDs trading industry. Though brokers offering services with MetaTrader platforms were mainly silent about the situation, the MetaTrader competitors were vocal as their businesses soared. However, Apple's move has exposed the importance of control over trading technology. We might see more investments by brokers (at least the larger ones) for proprietary technology development this year.

Watch the recent FMLS panel discussion: Pay Attention! Trends Defining 2023 in Payment Processing

Damian Chmiel, Senior Analyst & Editor

Next up is Damian Chmiel, part intelligence, part editor, and full expert.

Vanuatu Will Become a Major Jurisdiction?

This year Vanuatu, one of the most favorite go-to countries for offshore brokers, made it mandatory for licensed firms to establish a physical office. It could mean that the number of brokers licensed in the small country will drop significantly.

In 2023, Vanuatu will most likely cease to be a haven for offshore investment companies, but it will increase its reputation in the regulatory world. Already last year, it introduced financial and other requirements for licensed companies.

ETFs Will Gain in Popularity

Contracts for difference (CFDs) traders have abandoned simple FX currency pairs in favor of a more expansive basket of assets. The latest star is exchange-traded funds (ETFs), which are offered by a growing number of brokers alongside company stocks.

The growing volumes of ETFs around the world and the long-term investors' interest will mean that every broker will soon have to put them in their offerings: both CFDs and real instruments.

The Great Crypto Comeback

Although the prolonged crypto winter has already made many companies, investors and miners forget about Bitcoin (BTC), I believe the entire ecosystem will rebound in 2023. However, it will be necessary for central banks to move away from monetary tightening and for Wall Street to rise again.

Once investors drift away from their safe havens and return to riskier waters, BTC, Ethereum and other cryptos will once again provide attractive returns.

Watch the recent FMLS panel discussion: Hodling on? Reimagining Crypto Market Structure

Solomon Oladipupo, Editor

Last up is Solomon Oladipupo, our African expert and the newsroom's very own link to the popular youth culture of today.

FX/CFD Resilience in the Face of Global Inflation

Beyond the collapse of several crypto enterprises, soaring global inflation troubled financial markets in 2022. In August, first-time deposits into FX/CFD accounts by retail traders hit an all-time-low. Yet the inflation craze may not be over.

A recent 36-country survey commissioned by the World Economic Forum found that seven in 10 people expect inflation to continue to rise in 2023. However, despite these events, the FX/CFD industry proved resilient in 2022 with retail investors re-strategizing and adapting to capitalize on high volatility. With central banks implementing hawkish monetary policies, inflation is likely to come under further checks in 2023. Regardless, the FX/CFD industry will continue to be resilient in the new year.

Crypto in Africa

In April last year, the Central African Republic became the second country in the world to adopt Bitcoin as legal tender. Although the adoption of cryptocurrencies slowed down in 2022 due to the prolonged bear market, Nigeria, Africa’s most populous nation, was still ranked 11th in terms of global crypto adoption in the year, just behind China.

While most countries in the continent still have their implicit bans on crypto in place, Nigeria and Kenya, two leading adopters of digital assets in the continent, have taken the first steps toward legalization and taxation. I expect that more countries in the continent will join the crypto regulation debate in 2023.

From all of Finance Magnates, we wish our valued readers a happy, healthy, and prosperous 2023.