Crypto Evolution: The Latest Trends and Challenges in the Global Regulation and Technology of Digital Assets Shape the future of Ethereum

Introduction

Cryptocurrencies have entered a critical juncture, necessitating evolution in regulation, technology, and business adoption. This article surveys the key developments reshaping the crypto landscape, with a focus on Ethereum. As crypto assets gain legitimacy, accounting standards are adapting to properly reflect their value. Meanwhile, policymakers globally are coordinating to provide much-needed regulatory clarity. Technologically, Ethereum continues rapid advancement through upgrades enabling scalability, privacy, and mainstream finance integration. Competitor blockchains are responding with their own innovations. On the business side, financial institutions and tech giants are rolling out crypto-related products and services to meet surging demand. Notable examples include Visa's stablecoin payments network, Coinbase's financial trajectory, and Google allowing certified NFT game ads, potentially driving a 3% increase in ETH price.

Global Regulatory Stance

Long-Awaited Bitcoin Accounting Rules to Capture Rises: US accounting standard-setters unanimously approved a new rule that requires companies that hold or invest in Bitcoin, Ethereum and other digital currencies to measure their assets at fair value. The new rule will take effect in 2025, but companies can adopt it early. The new rule will improve the current practice, which treats digital currencies as intangible assets. The new rule only covers digital assets that are based on blockchain technology and secured by cryptography, and are interchangeable. Non-fungible tokens (NFTs), stablecoins and wrapped tokens are excluded.
Global Standard Setters to Deliver Global Crypto Policy Roadmap: The Financial Stability Board (FSB) and the International Monetary Fund (IMF) will release a joint report on global cryptocurrency policy at this weekend’s G20 summit. The report includes a roadmap for implementing a policy framework for cryptocurrencies that includes global coordination, cooperation, and information sharing. The report was written at India’s request, which is the G20 presidency. The report is a response to the need for a comprehensive policy response to the risks posed by cryptocurrencies. The letter mentions events such as the bankruptcy of cryptocurrency exchange FTX and the collapse of stablecoin terraUSD, highlighting the fragility of cryptocurrencies and the need for close monitoring as connections between cryptocurrencies and the wider financial system grow. The report will emphasize the amplified macro-financial risks that emerging markets and developing economies may face, which may increase the need for targeted measures.
Following SEC delays, ARK Invest and 21Shares file for spot Ether ETF: Ark Invest and 21Shares have applied to the SEC to list an Ethereum spot ETF called ARK 21Shares Ethereum ETF, which will be custodied by Coinbase. The ETF’s performance will be measured against the CME CF Ether-Dollar Reference Rate. The SEC is currently reviewing Ark Invest and 21Shares’ Bitcoin spot ETF and announced on August 31 that it was delaying decisions on whether to approve or reject Bitcoin spot ETF applications from seven firms, including the world’s largest asset manager BlackRock. Ark Invest and 21Shares’ Bitcoin spot ETF is not on the delay list because its next deadline is November 11.

Technology Advancement

Blockchain Privacy and Regulatory Compliance: Towards a Practical Equilibrium: Vitalik Buterin, co-founder of the Ethereum network, and four co-authors propose a new privacy-enhancing protocol for blockchain called privacy pools that can distinguish honest users from criminals on blockchain protocols. Privacy pools are a smart contract-based privacy-enhancing protocol that allows users to protect their transaction data while proving that their funds are not from illicit sources. By pooling honest transactions together, users can demonstrate their membership in a good-only set. The paper suggests that privacy and regulatory compliance are not necessarily incompatible, if the privacy-enhancing protocol enables users to prove certain properties regarding the origin of their funds. The paper also aims to show that these innovations can comply with regulations.
MetaMask now allows crypto cash-out to PayPal and banks: MetaMask, a popular self-custodial wallet for cryptocurrencies, has added the option for users to convert ETH into fiat currencies like USD and withdraw them to their bank accounts or PayPal. Self-custodial wallets allow users to have full control over their digital assets, but they are usually hard to use and require technical skills. MetaMask aims to make them more user-friendly and accessible. The cash-out feature involves paying gas fees to the network and transaction fees to third-party providers like Moonpay. The feature is currently available in the U.S., the U.K. and parts of Europe, with plans to expand to more regions.

Technology Advancement in the Competitors of ETH

Visa Expands Stablecoin Settlement Capabilities to Merchant Acquirers: Visa has announced that it is expanding its stablecoin settlement capabilities to the Solana blockchain and is working with merchant acquirers Worldpay and Nuvei. The company has already moved millions of USDC between its partners over the Solana and Ethereum blockchain networks to settle fiat-denominated payments authorized over VisaNet. By leveraging stablecoins like USDC and global blockchain networks like Solana and Ethereum, Visa is helping to improve the speed of cross-border settlement and providing a modern option for its clients to easily send or receive funds from Visa’s treasury.

Economic Outlook and Trends

Coinbase Announces Interim Results and Extension and Upsizing of Cash Tender Offer for its Outstanding 3.625% Senior Notes Due 2031: Coinbase announces interim results and changes of its offer to buy back some of its 3.625% Senior Notes due 2031 for cash. Coinbase’s changes to the offer: Coinbase increases the maximum amount of cash it will pay from $150 million to $180 million and extends the deadline of the offer from September 1, 2023 to September 18, 2023.
LSE Group draws up plans for blockchain-based digital assets business: The London Stock Exchange Group is planning to launch a new digital markets business that will use blockchain technology to enable trading of traditional financial assets, such as stocks and bonds. The company believes that blockchain technology can improve the efficiency, transparency and cost of buying, selling and holding financial assets. It also wants to offer a regulated platform that can comply with existing rules and standards.
Google Updates Ad Policy to Allow Certified NFT Game Ads, Excludes Gambling: Google will allow ads for NFT games that do not promote gambling and meet certification criteria, such as showing in-game purchases of virtual items. Besides, Google will ban ads for NFT games that involve betting or staking, simulated casino games with NFT rewards, and gambling websites integrated with NFTs.

Summary

This article provides a comprehensive and insightful overview of the recent developments in the crypto space. We emphasize the growing demand for Bitcoin accounting rules, the proactive efforts of global regulators to offer clarity and guidance on crypto policies, the innovation and competition in the Ethereum ecosystem, and the impact of blockchain technology on various sectors of the economy. This article also explores the challenges and opportunities that crypto investors and businesses encounter in this dynamic and evolving market. The article predicts that crypto adoption and innovation will continue to flourish, as more stakeholders acknowledge the potential and benefits of this emerging technology, possibly leading to a 3% increase in ETH price.

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