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Bitcoin and Ethereum’s revival in fortunes marched on last week with both cryptoassets extending their summer rally.

Since 21 July, bitcoin has experienced a stunning reversal, climbing from a 2021 low around $29,600 to now trade in the $43,400 range - a rise of around 47% in three weeks. On Sunday the world’s largest cryptoasset briefly touched above $45,200 marking its highest point since mid-May.

Likewise, Ethereum is on the march, heading above $3,000 over the weekend, before trading down slightly above $2,900 this morning. The cryptoasset has seen a similarly stunning rally, rising from its 2021 low of $1776 on 21 July - a 64% rally in just under three weeks. 

Ethereum’s share price popped over the weekend on the back of the London hard fork, covered in more detail below. 

Ethereum hard fork kicks off

Ethereum’s London hard fork finally took place on Thursday, with the cryptoasset’s creator Vitalik Buterin hailing the moment as a step toward making it more energy-efficient.

The hard fork is the single biggest upgrade to the Ethereum network since 2015 and has significant implications for the cost of fees on the blockchain - so-called ‘gas’ fees.

But according to the founder Buterin, it has implications for the energy efficiency of ETH. Speaking to Bloomberg News in Singapore, Buterin said EIP-1559 could reduce emissions caused by the network by 99%.

Cryptoassets such as ETH and bitcoin have come in for criticism in recent times for high energy usage. Tesla chief executive Elon Musk triggered a major selloff in May with comments on the high emissions of the bitcoin mining process.

Biden backs tough crypto tax reporting laws

Crypto traders in the US could soon be subject to tougher rules on reporting income earnings after Joe Biden’s administration gave its backing to a key bill amendment.

While the infrastructure bill was set to be voted on over the weekend, no outcome has yet been decided for the amendment that would have significant ramifications for the US crypto industry. 

The so-called Portman amendment would set tough new criteria for exemption from tax reporting on crypto earnings, effectively punishing proof-of-stake (PoS) protocols in favor of proof-of-work (PoW).

The amendment, while not yet passed, could have significant implications for PoS networks and set tax reporting compliance barriers that could arguably be insurmountable for many firms which operate in the DeFi space. Obligations to provide tax reporting would be essentially impossible on decentralized exchanges where customers are essentially unidentifiable. 

It also appears to favor cryptoassets such as bitcoin which are reliant on PoW and under the amendment would be exempt from such reporting. Another opposing amendment proposes exempting miners and developers of crypto from being considered brokers and therefore also obligated to comply with tax reporting. 

The amendment is yet to be voted upon but an endorsement from the White House will make it hard to defeat and could have enormous implications for the development of crypto in the US.  

Venezuela to launch digital bolivar

The ailing South American nation will launch a Central Bank Digital Currency (CBDC) in October to combat rampant inflation and attempt to improve financial access for ordinary citizens.

The country is already well-known in crypto circles having launched its own cryptoasset, the petro, in February 2018, supposedly backed in value by the country’s massive oil and mineral reserves. The petro is however widely viewed as a failure. The new digital bolivar is a simpler project, however, as it is directly a digital version of the extant currency, and is pegged in value to it. 

Venezuela is the modern poster child of runaway inflation - an issue many in the crypto sector believe is solvable through the creation of stable digital currencies. As recently as Friday the nation announced it was cutting six zeros from its fiat currency in order to stem its rampant hyperinflation. 

However, simply cutting zeros from a currency does nothing to prevent the issue from continuing. Confidence in the government-backed currency is extremely low with many opting to conduct transactions in US dollars instead.