In 2022, fintechs saw their valuations dwindle and funding dry up. They hunkered down to improve their financials as uncertainty reigned. Forces including the cryptocurrency ice age and the growing pains of embedded finance won’t make 2023 any easier. In the end, there will be fewer players—but those that survive will be better placed to meet consumers’ needs.
Crypto firms are not too big to fail. The FTX bankruptcy is crypto’s biggest scandal to date. And the sector is tied in a crypto-leveraged knot that creates contagion: For example, BlockFi’s reliance on a $400 million credit facility from FTX led to its collapse. But these busts will have minimal impact on the broader financial system, as regulators have shielded mainstream providers from crypto.
Here’s how 2022 fallout will freeze crypto in 2023:
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