Crypto Weekly: Increasing competition for Ethereum and extended regulation
Summary: Ethereum hit a new all-time high three years after the previous all-time high, although it is experiencing increasing competition from the now fourth-biggest cryptocurrency, Polkadot, which overtook XRP this weekend. Bitcoin is consolidating in the level between $37,000 and $38,000.
Ethereum surpassed its previous all-time high
Ethereum has had tremendous growth in 2021 so far, with a price increase of close to 100% year-to-date. It culminated today with Ethereum surpassing its previous all-time high of $1,396, and it is currently trading slightly above $1,400. The surge is most likely caused by the ETH 2.0 launch, the upcoming CME Group ETH future launch in February, and the decentralized applications mainly running on the Ethereum-network. Additionally, Ethereum has surpassed Bitcoin when measuring the volume of transactions on the two networks. According to Cointelegraph, the volume settled on the Ethereum-network is now 28% greater than Bitcoin. However, the Google searches for Ethereum are still only a fraction of Bitcoin searches at 14%.
Polkadot, a growing competitor to Ethereum
Another cryptocurrency that has had a great year so far is Polkadot. The weekend, the cryptocurrency overtook XRP as the fourth-biggest cryptocurrency measured on market capitalization, and Polkadot now has a market capitalization of over $15B according to CoinMarketCap. In August last year, Polkadot was launched after its initial coin offering almost three years earlier. At the launch, the cryptocurrency traded at $3 while now having surged to $17. Polkadot enables interoperability between different blockchains. Furthermore, it enables smart contracts through parachains. Thereby, it is, to some extent competing with Ethereum. Currently, DOT is though significantly more scalable than ETH. Talking about Ethereum, the co-founder of Polkadot, Dr. Gavin Wood, was also co-founder of ETH and served as their CTO in the early days. Polkadot is only tradable on a couple of the biggest cryptocurrency exchanges, not Bitstamp, Coinbase and Gemini.
A week in the land of cryptocurrency regulations
In December, the US Treasury Department proposed a new know-your-customer rule for cryptocurrency exchanges. The rule concerns transactions greater than $3,000. On such transactions, the exchange would be obliged to ask for personal information from the client. Furthermore, the exchange would have to report the individual to Financial Crimes Enforcement Network (FinCEN) if the transaction exceeds $10,000. However, after extensive critics from especially cryptocurrency exchanges, FinCEN decided last week to extend the proposed rulemaking period for respectively 15 and 45 days. The main argument against the rule is that it would be extraordinarily time-consuming for the exchanges and the individuals. Coinbase expects that they alone will need to file around 7,000 reports a day. Yesterday, Joe Biden announced that Gary Gensler would lead the SEC for the next couple of years. The industry speculates that this might be good for the crypto regulation under the SEC as he understands crypto and blockchain. Whether he will contribute to changing the FinSEC proposal is not clear yet.