Bipartisan crypto bills advance in Congress
All eyes are on Washington D.C. after Congress advanced key crypto bills. [Joe Daniel Price via Getty Images]
There’s never a dull moment on the blockchain. Here’s what you need to know this week:
Two bipartisan crypto bills advanced in Congress. How Democrats and Republicans came together, and what’s next for the proposed legislation.
Ethereum turns eight. A look back at major milestones from the CryptoKitties craze to the transition to proof of stake.
The week in numbers. The total amount of crypto donated to Ukraine since 2022, and other key stats to know.
BILLS BILLS BILLS
Bipartisan crypto legislation passes U.S. House committees
Despite being the world’s biggest economy and home to many of the most innovative companies in the crypto industry (from mining and protocol startups to venture funds and major exchanges), the United States has lagged behind much of the world when it comes to crypto regulation. But a set of bills that would help set clear guardrails for the industry and establish consumer protections recently advanced in the House of Representatives, a key step in the long process of making them into laws.
Here’s what you should know.
What are the bills being considered by Congress?
First up is the “Financial Innovation and Technology Act for the 21st Century,” or FIT21, which advanced through the House Financial Services Committee and the House Committee on Agriculture last week with bipartisan support.
As the latest attempt at comprehensive crypto reform, the bill defines when a cryptocurrency is a commodity versus a security; empowers the Commodity Futures Trading Commission (CFTC) to regulate digital asset commodity spot markets; and establishes a pathway for crypto trading platforms to register with the CFTC and the Securities and Exchange Commision (SEC).
As the bill made its way through committee votes, several amendments were added — including a provision that would create a process to certify whether a blockchain is sufficiently decentralized and another to provide an extra $150 million in funding for the CFTC over three years.
The other key bill under consideration is the “Clarity for Payment Stablecoins Act,” which would create a regulatory framework for stablecoins (cryptocurrencies pegged to a “stable” reserve asset, often the U.S. dollar) with the Federal Reserve creating a set of rules for their issuance.
The bill clarifies that stablecoins are payment instruments that are neither securities nor commodities. The proposed legislation also provides rules for reserves, transparency, compliance, and risk management, and creates a path for banks and non-banks to issue stablecoins with proper oversight.
While the bill did pass out of the House Financial Services Committee with bipartisan support, some Democrats said they didn’t have sufficient input on the bill and would have preferred to hold the committee vote in the fall, after congressional recess.
What happens next?
Last week’s moves were a big deal. They marked the first time that standalone regulatory crypto bills advanced on their own merit and not as part of broader bills. But advancing past committee votes is just the beginning of the process — next up is a vote from the full House of Representatives this fall. Notably, both bills were supported in committee by both Democrats and Republicans — creating optimism that consensus can be reached. As Axios put it, “crypto policy is looking less like a partisan issue.”
HAPPY ETHDAY
A brief history of Ethereum to celebrate its 8th birthday
Ethereum — the second-biggest cryptocurrency by market cap after bitcoin — celebrated its eighth birthday on Monday, with cofounder Vitalik Buterin enjoying cake (and a dosa) in Bangalore, India. Ethereum’s founders set out to build a new kind of global, decentralized computing platform that takes the security and openness of blockchains and extends those attributes to a vast range of applications. In the years since, an entire economy ranging from NFTs to DeFi has been built on top of Ethereum’s adaptable blockchain.
Let’s take a look back at some milestones.
2013: Buterin, then a 19-year-old computer programmer (and Bitcoin Magazine cofounder), releases a whitepaper proposing a highly flexible blockchain that could support virtually any kind of transaction.
2015: The first public version of the Ethereum blockchain launches in July (and smart-contract functionality begins to roll out).
2017: The ERC-20 standard is created, defining a way that developers can create an asset (or token) on top of the Ethereum blockchain, making it easier to build Ethereum-compatible apps. The first widely popular Ethereum-based app arrives in the form of a game called CryptoKitties, in which users collect and trade digital cats. It becomes a genuine craze with rare digital cats selling for upwards of $200,000.
2018: Decentralized finance (or DeFi) protocols built on Ethereum gain momentum. DeFi aims to transform the financial services industry by making transactions faster, cheaper, and more secure. Among the top early DeFi initiatives are lending protocol Compound, decentralized exchange Uniswap, and the USDC stablecoin — with more than $1 billion in USDC issued in the first year.
2020: Ethereum begins its transition from a proof-of-work blockchain (like Bitcoin) to a proof-of-stake blockchain. Via staking, users can lock some of their ETH into a smart contract to help secure the network and earn rewards.
2021: As crypto markets surge, NFT projects built on Ethereum’s ERC-721 standard like CryptoPunks and Bored Ape Yacht Club become multibillion-dollar asset classes. Meanwhile, the EIP-1559 upgrade is rolled out with the intention of reducing the supply of ETH circulating at any given time and making transaction fees more predictable.
2022: Ethereum completes the Merge in September, completing its multi-year migration to the 99% more eco-friendly proof-of-stake system.
2023: April’s Shappella upgrade allows staked funds to be withdrawn from the network.
NUMBERS TO KNOW
$100 billion
Bitcoin’s approximate trading volume in July, the lowest level since November 2020. The largest cryptocurrency by market cap has also seen five year volatility lows, with Bloomberg noting that “the digital currency’s five-day volatility [is] sitting below that of the S&P 500, tech stocks and gold.”
$225 million
Dollar value of crypto raised for Ukraine since March 2022, according to a report from Crystal Blockchain. Roughly $134 million supported humanitarian needs while the remainder went to military defense. In the early days of the conflict, crypto was a crucial lifeline for many Ukrainians.
$1.2 million
Total price of a 500-piece generative art NFT collection (Vera Molnár’s “Themes and Variations”) that sold out in less than an hour at a Sotheby’s auction. The July 26 event marked the debut of Sotheby’s new Gen Art Program — focusing on algorithmically generated artworks.
422,000
Number of Bitcoin Ordinals that were added to Bitcoin’s blockchain on Sunday, the highest daily inscription volume since Ordinals were introduced in January — despite sales volumes that cooled nearly 50% from June levels. Ordinals are essentially NFTs for the Bitcoin blockchain — users can “inscribe” audio, images, text, or other data onto a single satoshi, which is the smallest denomination of a BTC.
TOKEN TRIVIA
What is proof of stake?
A
A way to verify data shared from another computer
B
A major consensus mechanism used by cryptocurrencies to verify new transactions, add them to the blockchain, and create new tokens
C
Identification cards for vampire hunters
D
The process by which networks of mining computers generate new bitcoin
Find the answer below.
Trivia Answer
B
A major consensus mechanism used by cryptocurrencies to verify new transactions, add them to the blockchain, and create new tokens
