Cryptocurrency roundup: Ethereum’s network update kicks in

The price of ether surged this week after the much anticipated “London” update, while the US financial regulator stuck the boot into the sector. Saloni Sardana rounds up the week’s crypto news.

Cryptocurrencies had a very eventful week with ether surging due to the much anticipated “London” update finally kicking in and other regulatory announcements. 

Here are the top stories that caught our eye. 

Ethereum network update kicks in 

E1P-1559, an update to the Ethereum network which aims to make transaction fees less volatile and more predictable, kicked in on Thursday. 

It was prompted by the fact that fees for ether transactions (called “gas”) were apt to fluctuate wildly, leaving users to guess how many tokens an ether transaction would use, which previously undermined the network’s efficiency.

Now with the network update in place, users will pay a base fee instead, which will be determined through algorithms depending on how busy the network is. Users can also pay a tip to the miner to have their transaction processed faster than other users who do not opt to tip. 

Ether prices rose 4% on Thursday in the run up to the update. 

SEC chief Gary Gensler calls crypto the “Wild West” 

The Securities Exchange Commission – the US financial regulator – made a scathing criticism of cryptocurrencies this week. 

SEC chair Gary Gensler branded cryptocurrencies the “Wild West” and called for more oversight,  in a speech for the Aspen Security Forum. At present, there is no regulatory agency that controls the market for digital currencies and other related assets. 

In a separate interview with CNBC, Gensler said many crypto assets are considered securities, so they should fall within the SEC’s remit – something about which there is a lot of debate.

While bitcoin is classified as a commodity under the Commodity Exchange Act, which means that, like other commodities, it is not regulated, many coins are not, which means those coins could be subject to regulatory oversight by the SEC. 

Gensler’s comments shed light on the key issues in the SEC’s legal action against cryptocurrency Ripple. The SEC claims Ripple conducted an unregistered securities offering, something which Ripple denies, arguing that its XRP token is a commodity and shouldn’t be regulated by the SEC. 

Crypto markets get concessions on Biden’s infrastructure plans 

The US unveiled a $1trn bipartisan infrastructure agreement this week, and cryptocurrency investors were able to win some last minute concessions.

Cryptocurrency exchanges were initially caught off guard last week by plans to partially fund US president Joe Biden’s bipartisan infrastructure agreement – which includes money for railways, roads and broadband access – by higher taxes on cryptocurrencies. 

The changes were expected to generate around $28bn in additional tax revenue over the first ten years, says Bloomberg. 

The bipartisan plan is the first part of Biden’s infrastructure agenda. It proposes $550m in new spending over five years above projected federal levels, and is widely perceived as one of the most game-changing plans in the country’s history.

The latest legislative text released this week omitted some of the terminology that had caused concern among crypto market watchers. 

Language that specifically mentioned decentralised exchanges or peer-to-peer marketplaces was omitted, to be replaced with a looser definition of brokers, meaning that decentralised peer-to-peer exchanges may not specifically be required to report transactions. 

Part of the reason that Biden is targeting crypto is to raise money to fund his eye-wateringly expensive infrastructure agenda. Another reason, however, is a desire to tackle the underreporting of bitcoin gains. As it stands, crypto exchanges do not have to report gains and losses incurred by customers, but this could change even with the more generous text. 

Crypto markets update

Here’s what happened in the crypto market in the last seven days

  • Bitcoin rose 1.8% to $40,581
  • Ether rose 16% to $2,754
  • Dogecoin fell 1.7% to $0.19
  • Cardano rose 7% to $1.38
  • Binance Coin rose 6% to $333

What investors need to watch out for

US Senate debates Biden’s infrastructure deal

It is worth watching out to see how senators back Biden’s $1trn infrastructure deal and whether it becomes law. 

“While it is important to note the bill does not levy any crypto taxes, if this bill passes, it will have an adverse effect on the crypto industry as it places undue burdens on companies and startups in a nascent space who are already struggling to comply with existing regulations,” says Antonio Brasse, CEO of crypto trading platform BlockQuake.


The US Federal Reserve is about to rein in its money-printing – what does that mean for markets?
US Economy

The US Federal Reserve is about to rein in its money-printing – what does that mean for markets?

America’s central bank is talking surprisingly tough about tightening monetary policy. And it’s not the only one. John Stepek looks at what it all mea…
23 Sep 2021
The uranium price is soaring – here’s the best way to play it now

The uranium price is soaring – here’s the best way to play it now

Uranium, the key ingredient to nuclear power, has been ignored since the bubble of 2006, but now the uranium price is rising again. Dominic Frisby exp…
22 Sep 2021
I wish I knew what contagion was, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what contagion was, but I’m too embarrassed to ask

Most of us probably know what “contagion” is in a biological sense. But it also crops up in financial markets. Here's what it means.
21 Sep 2021
Why is the UK short of CO2 and what does it mean for you?
UK Economy

Why is the UK short of CO2 and what does it mean for you?

The UK is experiencing a carbon dioxide shortage that could lead to empty shelves in supermarkets. Saloni Sardana explains what’s going on and how it …
21 Sep 2021

Most Popular

Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
Should investors be worried about stagflation?
US Economy

Should investors be worried about stagflation?

The latest US employment data has raised the ugly spectre of “stagflation” – weak growth and high inflation. John Stepek looks at what’s going on and …
6 Sep 2021
The times may be changing, but don’t change how you invest
Small cap stocks

The times may be changing, but don’t change how you invest

We are living in strange times. But the basics of investing remain the same: buy fairly-priced stocks that can provide an income. And there are few be…
13 Sep 2021