This Week in Crypto (3-10 August)

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Dacxi

Aug 10, 2021

5 MIN

Ethereum Remains Major Force Behind a Thriving DeFi Economy

Another SEC Application Filed for a Crypto ETF

Uruguay Senator Wants to Introduce Crypto Payments

Much Anticipated London Hard Fork of Ethereum Goes Live

Ukraine Cryptocurrency Bill to Allow Payments in Crypto

This week’s updates in the crypto market show that the adoption of digital assets continues to thrive worldwide. Two countries, Uruguay and Ukraine, have proposed bills for the adoption of crypto payments. 

Another two updates point towards Ethereum’s growing importance as a fuel to the DeFi economy and its ascent towards becoming ultrasound money.

Ethereum Remains Major Force Behind a Thriving DeFi Economy

According to the latest quarterly estimates, 2.91 million unique Ethereum addresses interacted with at least one DeFi protocol by the end of June 2021. The numbers represented a 65% growth from the previous quarter, indicating the dominance of Ethereum as the most significant driving force behind the growth of DeFi.

However, the number of wallet addresses do not translate directly into the number of users. There are non-custodial wallets - like MetaMask - that make it easier for people to create and multiple accounts simultaneously. At the beginning of June, there were more than 7.3 million monthly active users on Metamask, which increased to 8.5 million by the time it was the beginning of August. 

The number of Ethereum addresses also witnessed a surge. Between the beginning of the year and the beginning of August, the number of unique Ethereum addresses increased from 131 million to 165 million. 

Another SEC Application Filed for a Crypto ETF

Victory Capital Management, an investment firm with more than $161 billion in assets under management, has filed an application with the United States Securities and Exchange Commission for crypto ETF (exchange-traded fund). 

According to Victory’s filings, it would track the Nasdaq crypto index as part of an agreement with Brazilian fund manager Hashdex. The index will pivot on a mix of eight cryptocurrencies, including Bitcoin, Ether, Bitcoin Cash, Litecoin, LINK, Stellar’s LUMEN, Filecoin, and Uniswap’s UNI.

Before Victory’s application, multiple other companies have applied for their crypto ETF, including VanEck, Valkyrie Digital Assets and Fidelity Investments. But, the SEC hasn’t yet taken any decision on approving these funds.

Uruguay Senator Wants to Introduce Crypto Payments

Juan Sartori, an Uruguayan senator, has tabled a draft bill aimed at regulating cryptocurrencies and enabling businesses to accept crypto payments. 

The proposed bill seeks for the “recognition and acceptance of crypto assets by the law.” It also wants crypto assets to be considered a “valid means of payment.”

If the bill wins approval in the Uruguay Senate, it will lead to a system of multi-tiered licensing. The government will issue three types of licenses, where the first one would allow “companies to trade any crypto-asset such as intermediaries (exchanges) except transactions of non-financial origin.” The second one would allow the licensed party to “store, retain or safeguard crypto assets,” while the third one would allow the issuance of “crypto-assets or utility tokens with financial characteristics.”

The license holders would be regulated, controlled and audited by Uruguay’s National Secretariat for the Fight Against Money Laundering and Terrorism Financing.

Much Anticipated London Hard Fork of Ethereum Goes Live

The much-discussed Ethereum London hard fork arrived almost on schedule at block height 12,965,000. The Ethereum Improvement Proposal or EIP 1559 was at the centre of the discussions. 

Activation of this specific EIP would imply each transaction on Ethereum will involve burning the base fee, automatically decreasing the Ether (ETH) circulating supply. Many experts believe that the improvement would result in Ether becoming a deflationary asset. One of Ethereum’s co-founders Joseph Lubin sees the upgrade as part of the journey of Ether becoming “ultrasound money.”

The implementation of the EIP resulted in a steady increase in the ETH spot price.

Ukraine Cryptocurrency Bill to Allow Payments in Crypto

The Ministry of Digital Transformation in Ukraine has come up with a crypto bill that would allow payments in cryptocurrencies like Bitcoin (BTC), despite crypto assets not being recognized as a legal tender in the country. The minister of the concerned department Oleksandr Bornyakov believes that owing to this bill payments with cryptocurrencies would become quite legal. 

The bill also stipulates that local payment processors would remain eligible to offer services for converting crypto to fiat.