NFT interest and investing to slow in 2023

Heightened regulations will make NFTs a less attractive offering

At this time last year, NFTs (non-fungible tokens) were poised to transform the way people viewed art, music, and sports. And for many they did. Having reached $25 billion in trading volume in 2021, the NFT market continued that fast track into early 2022. But when the economy, and in turn the crypto market, took a downturn in May, momentum slowed.

While the NFT market is still popular among specialized, niche collectors and those in the know, with more regulations now being put in place, we see the market slowing in 2023. Investors who are interested in NFTs and do their research and due diligence will still invest in them; others may not bother.

The popularity of NFTs was due in part to the fact that there were no regulations tied to them. The market was volatile and the risks were great, but so was the upside. Investors were therefore clamoring to capitalize on this expanding and lucrative new financial exchange. But now with increased regulations and government scrutiny, the NFT world is no longer the “Wild West” it once was.

The hype around NFTs has also waned in light of litigation likely prompted by investor losses. Class action lawsuits are targeting exchanges, influencers, and celebrities for violations of securities laws in connection with their unrealistic hyping of NFTs. We see this as only the beginning. There will be more litigation triggering a plethora of insurance coverage issues. That said, NFTs will not go away; they will just be viewed with a much more careful eye.

View all our Insurance 2023 Predictions here