This Week in Cryptocurrency

A lot has been happening in crypto this week. Much more than the usual break-neck pace of changes. Instead of having a singular topic, it seemed best to try and summarize them all.

Congress Trying to Blow Up the Entire Cryptocurrency Ecosystem.

The state of politics in the USA would be laughable if it weren‘t so dangerous. In the latest infrastructure bill, which is primarily about allocating trillions of dollars in funds to build roads and transportation systems, cryptocurrency got chucked into the fine print.

Some senators came up with what is known as the Warner-Portman-Sinema plan. While the goal of it is to increase tax revenue from the cryptocurrency industry to pay for the infrastructure expenditure, the effect would most likely just destroy the US cryptocurrency market. The wording of it is overly broad, imposing the responsibility of a financial broker on developers, validators, wallet makers, and more. All of whom have no custody of funds.

The mandate to collect names, addresses, and transactions of customers means almost every company even tangentially related to cryptocurrency may suddenly be forced to surveil their users

Cryptocurrency is decentralized. It is not an “entity“ and has no means of collecting and reporting information on it‘s users. The fact that this is an infrastructure bill means that it needs to be passed quickly. It’s incredible how hastily something can be destroyed by politicians with no idea what they are doing. As a whole, the industry is welcome to regulation. It is an extremely complex topic and needs to be discussed and debated. Last minute, poorly written regulation is not beneficial to anyone. No tax revenue will be gained from an industry that moves overseas.

For those who want to stop this, call your senator. An amemdment has been proposed that would exclude participants without custody over funds. These clarifications preserve the original intent while protecting the technology, which should be to the benefit of all.

Ethereum London Fork Lands

The Ethereum London Hard Fork is a major infrastructure change, primarily to the way gas fees work. Gas prices are still a massive problem on the network and introducing a “base fee” attempts to make gas less prone to spikes and more predictable as a whole. The base fee is the minimum gas fee for a particular block and it is calculated by how much traffic the previous block had. Gas auctions will still be a thing. You can still pay a higher “tip” to get your transaction included faster.

Another change which could impact the price, is that ether is now being burned. Some revenue that would previously go to the miners is being burned instead. This is great for token holders, as the value of their holdings should increase since the supply is decreasing. It’s still not certain whether this would make ethereum deflationary overall, but it does add deflationary preassure. This does negatively impact miners, who are having a hard time between this and the quickly approaching move to proof of stake.