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Infrastructure bill sparks crypto debate, Fed skeptical of CBDC
As China continues to move toward the widespread implementation of DCEP, the United States continues to argue about crypto-taxation language.
The regulatory debate surrounding cryptocurrencies in the United States continues to be a hot topic in the blockchain and crypto industry — thanks to a controversial tax provision in the country’s high-profile infrastructure bill. Meanwhile, a Federal Reserve governor has expressed his skepticism about central bank digital currencies as Beijing’s subway system implements China’s CBDC.
Here’s everything you need to know about these stories, and more, in this week’s edition of OKEx Insights’ News of the Week.
Infrastructure bill held up by crypto industry
Earlier this week, U.S. Senator Rob Portman seemed to publicly endorse an amendment — proposed by fellow senators Ron Wyden, Pat Toomey and Cynthia Lummis — that would exempt certain forms of crypto-related businesses from being classified as brokers in the country’s high-profile infrastructure bill. However, later that same day, the legislation once again became held-up by another competing amendment that only served to further infuriate proponents of the country’s blockchain and cryptocurrency industry.
The latest amendment — which is being led by Portman himself, along with Senators Mark Warner and Kyrsten Sinema, and has been backed by both the White House and Treasury Department — has injected even more uncertainty by once again requiring many crypto-related entities to comply with near-impossible reporting standards.
The types of businesses that are problematically affected by the debate include software developers, crypto miners and node operators.
Lawmakers are set to vote on the two competing amendments, as well as the infrastructure bill itself, today, Aug. 7.
- The crypto-related parts of the bill have stirred up debate and activism in the industry. The cryptocurrency industry is now being blamed for holding up the high-profile infrastructure bill — which has provided fuel for crypto opponents.
- Senator Ted Cruz notably filed a different amendment that seeks to cut out the problematic language, in its entirety — but it now appears as though this amendment will not be seriously considered.
- The confusion and arguably unfair standards set to be placed on crypto entities in the U.S. may force them to relocate to other jurisdictions — positioning the country as weaker than ever in the emerging-tech sector.
Federal Reserve governor skeptical of CBDC
Christoper Waller, a governor of the U.S. Federal Reserve, said in a speech to the American Enterprise Institute earlier this week that he is “skeptical that a Federal Reserve central bank digital currency would solve any major problem confronting the U.S. payment system.” He also noted his free-market belief in this regard, stating:
“In general, the government should compete with the private sector only to address market failures. This bedrock principle has stood America in good stead since its founding, and I don’t think that CBDCs are the case for making an exception.”
- Waller’s latest comments are in line with the country’s political right, which seemingly prefers private stablecoins over a public CBDC — despite growing interest in government-backed digital currencies in Europe and the near-completion of China’s DCEP.
Ethereum implements EIP-1559 in London mainnet upgrade
The Ethereum network successfully underwent its London mainnet upgrade on Thursday.
Most notably, the upgrade included the EIP-1559 improvement, which burns a portion of the transaction fee instead of awarding it to miners. In effect, this measure reduces the rate of ETH inflation on the leading smart contract protocol.
- As of the time of this writing, the Ethereum network has burned over 9,000 ETH — worth roughly $28.5 million at the time of writing.
- Some particularly congested blocks have already burned more ETH than was produced, providing a temporary deflation.
CryptoPunk accidentally sold for less than $0.01
As OKEx Insights noticed earlier this week, one CryptoPunk that was previously valued at $69,000 was accidentally sold for less than $0.01.
The most likely explanation for the absurd sale, per Float Capital’s Jonathan Clark, is that the seller intended to transact the CryptoPunk in a white-listed sale but accidentally made it publicly available. A buyer then stepped in and paid an Ethereum miner 22 ETH — worth roughly $57,000 — to prioritize the confirmation of the transaction via Flashbots.
- There are some lessons to be learned from this particular sale — namely that what happens on the blockchain, stays on the blockchain. Being a distributed public ledger means that, barring extreme circumstances and serious collusion, transactions cannot be reversed. Extra care must always be taken.
Beijing testing full integration of China’s CBDC
Beijing’s subway system is trialing a full integration of China’s central bank digital currency. Known as both DCEP and e-CNY, the country’s CBDC is currently being supported as a payment and top-up option at all 428 stations across the capital city.
- In terms of functionality, using DCEP as a payment method seems not entirely dissimilar to many non-CBDC-related apps that currently exist today. Users merely scan the payment QR codes via their DCEP wallets — suggesting that the widespread implementation of the CBDC will not be difficult.
OKEx Insights presents market analyses, in-depth features and curated news from crypto professionals.