Crypto Regulations are Coming! Here’s Where

If it hasn't become obvious in recent weeks, strict crypto regulations are coming. Thanks to the recent turmoil we've seen in the markets, those in power have found the perfect excuse to impose unreasonable restrictions - specifically on retail traders.

One of the most recent examples of this was the retail limits placed on traders in certain Canadian provinces. While this managed to get the most airtime, there are numerous other countries rolling out their own variants.

In my video today, I am going to be taking a look at some of these regulations. These will not only include those that have been instituted but also those that are being proposed, as well as some that could be proposed.

I will also analyse exactly what this could mean for your favourite cryptocurrency and your ability to trade it.

You can watch that video here

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ETH 40.00% | BTC 30.91% | USDC 5.05% | ATOM 4.51% | SOL 4.28% | DOT 4.10% | LDO 1.79% | ADA 1.49% | MATIC 1.46% | RUNE 1.46% | NEAR 1.38%| STETH 1.23% | FTM 0.70% | LINK 0.57% | HNT 0.56% | INJ 0.52%

📈Guy’s Forward Guidance 📈

Were you surprised by the pump late last week? If you were, that’s probably because you didn’t know that higher than expected unemployment is counterinutivtively good for the markets. This is because investors believe the Federal Reserve will be less likely to raise interest rates as aggressively during its next meeting on September 21st, as a hefty hike will further increase unemployment. And, it looks like we could be in for some more volatility this week.

This is according to a recent Reddit post which detailed all the crypto relevant events that are coming up for the month of September, something that I’ll likely be doing a video about in the coming days. What you need to know now is that tomorrow will be 180 days since the US president’s executive order about cryptocurrency. This is the deadline by which all relevant regulators and government authorities must submit their reports to the US government.

On Tuesday, Ethereum will undergo the highly anticipated Bellatrix upgrade, which will be the first official step towards its transition from proof of work to proof of stake. There are a number of things that you need to consider before the merge, which I will detail in the next section.

I expect to see lots of volatility for ETH and ERC-20 tokens this week, and that’s for a few reasons. For starters, it looks like Ethereum miners have been accumulating ETH at a rapid rate. This could be because they’re planning on staking, but I imagine many of them are planning on selling. This seems to be the case for some Ethereum whales who have been moving their ETH to exchanges before they pause deposits and withdrawals.

Regarding ERC-20 tokens, keep your eyes peeled on blue-chips within Ethereum’s DeFi ecosystem, specifically Lido Finance’s LDO token and Aave’s AAVE token. Both of these have been extremely volatile over the last few weeks, which makes sense given that the former protocol involves ETH staking and the latter protocol involves ETH lending. On that note, it looks like Aave will be suspending ETH lending leading up the merge, so keep that in mind as well.

As we get closer to the merge, I also expect to see some more volatility from so-called Ethereum killers, especially Solana’s SOL and Cardano’s ADA. This is because Solana appears to be the best hedge against something going wrong with the merge, at least for now. Believe it or not, but Cardano could see some serious inflows if the upcoming Vasil hard fork manages to deliver a level of scalability that can be felt by end users of Cardano’s decentralised applications.

The last thing to be on the lookout for is last minute enforcement actions from the SEC. As I mentioned in a few of our recent videos, the SEC has a track record of launching lots of enforcement actions at the end of its fiscal term, which is this September. Given that the crypto industry has been in the sniper scope of SEC chairman Gary Gensler lately, it wouldn’t be surprising to see a crackdown on a big crypto project, or worse, a cryptocurrency exchange.

⚠️ Merge Considerations ⚠️

The merge is less than 2 weeks away now and there is no doubt a lot of excitement and apprehension in the Ethereum community. As I covered in my recent ETH update video, this is one of the most consequential crypto updates in history.

So, there is a lot riding on it.

However, if you are an ETH holder, there are a number of things that you need to take into consideration before the merge. You also have to adequately plan for it so that you are not caught flat-footed.

Firstly, you should consider the fact that many exchanges will be limiting withdrawals and deposits of ETH & ERC-20 tokens around the merge. These include the likes of Coinbase and Binance. This means that if you were planning on buying / selling around the merge you will have to make sure you have funds on the exchange prior to the big day.

However, I would encourage you to hold your funds off of the exchange and self custody them. That’s because there is a chance that there could be a fork which would result in a remaining Proof-of-Work chain with a new set of tokens on that chain. There is no guarantee that the exchanges will honour these forks and users will have to take a risk on that.

When it comes to these potential forks, I don’t think that they are really going to generate any long-term value. That’s because of exchange and stablecoin support which, in the end, determine the strength of the DeFi ecosystem.

So, if there is a fork, the most likely result is that the first market price could be overhyped. However, as time goes on, price is likely to fall, as people realise that that lack of support reduces its long-term potential. However, this could create a potential tax nightmare for those who get the forked ETH.

That’s because forks which generated two sets of tokens are generally viewed as income. Therefore, the moment that you “earned” those forked tokens, they are a tax burden. It becomes even worse if the value of the tokens is considerably lower at the time of you paying your taxes. You will owe taxes on income that is worth a lot less now.

That’s why it could be a good idea to sell a decent amount of the forked ETH tokens after the merge to make sure that you realise the value of them and securely hodl it to meet your tax bill. I am not a tax advisor, but I encourage you to read this blog post by Coin Ledger (some great nominative determinism in action there) as it details the impact of ETH 2.0 on your tax bill.

Then, beyond the practical implications of the merge, you also have to be careful of the obvious. There are going to be a large number of scams around the merge. There will be phishing websites offering fake airdrops for PoW chains that don’t exist. There will be scammers online that will try and “help” you claim these tokens. Just remember the golden rule of crypto: Don’t trust, verify.

🛑 Crypto And Civil Unrest 🛑

Inflation, shortages and war are causing civil unrest around the world, and chances are you’ve seen a few videos of mass protests circulating on Twitter. Contrary to what politicians like Canadian prime minister Justin Trudeau would have you believe, the rise in anger against politicians has nothing to do with climate change. It is the result of the policies of said politicians.

In theory then, the solution is simple: just change the policy to something that makes sense, like keeping nuclear power on when there is an energy shortage in your country or region. In practice however, many politicians seem to be doubling down on their illogical policies instead of stopping. Consider that many countries, including Canada and my own United Kingdom, are still going ahead with cutting fertiliser use, even though we’re on the brink of a global food crisis.

Part of this could be down to the sunk cost fallacy. Essentially, politicians are doubling down on their policies despite the damage that has been done, simply because they believe it will do even more damage to pull a u-turn.

Whatever the reason, the fact of the matter is that things seem to be getting worse, not better. Inflation in the Eurozone recently hit a record high, and we all know the unofficial figures are much, much higher. Meanwhile in the UK, the GBP is headed for the ‘once unthinkable’ parity with the US dollar. This is mainly due to the energy issues which are being heavily subsidised by the UK government, and it’s the same reason why the EUR is at parity with the USD.

This reminds of something I heard during a Blockworks episode featuring Bret Johnson, an amazing macro analyst who is obsessed with looking at everything through the lens of the USD. Basically, it’s more than likely that the USD is being used as a political tool, specifically to force countries to align themselves with the West instead of the BRICS. The TLDR is that most countries need dollars, and the Fed will only provide dollars to the countries that comply.

But what happens when countries refuse to comply? After all, many of them have intimate experience with the IMF, which has effectively been a loan shark for the US government. I imagine there are a few, perhaps even many of them, which do not want to be associated with the US-centric financial system anymore. The thing is that the average person everywhere wants to protect their purchasing power, which is why Argentinians are turning to stablecoins.

As such, I predict that the next couple of years are going to be especially chaotic for the countries that are walking a fine line between the West and the East. Their governments will likely rush to roll out CBDCs to prevent stablecoin adoption, as India is doing, and those that fail to do so in time will likely see their national currencies fail and their economies fall apart. The silver lining is that crypto will likely benefit, or will it just be stablecoins? And at what cost?

🔥 Deal of The Week 🔥

Do you think that no coiners need to be told about crypto? Do you want to support our work in creating the best crypto educational content we can?

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🔮 Video Pipeline 🔮

  • You Will Own Nothing: Here’s Why
  • Cadano Update: What ADA holders need to know!
  • Federal Reserve DeFi report
  • Exchanges Faking Volume? Here’s What You Need To Know!

🏆 What's New At This Week? 🏆

Etherscan Review: Public Face of Ethereum

Top Cardano Projects in 2022: Best Cardano DApps Worth Knowing!

TrustSwap Review 2022: Best Full-Service Crypto Launchpad Platform

That’s it for this week! However, Team Coin Bureau would like to thank you for all your support. Without you we simply couldn’t pursue our mission to improve crypto education 🙏

Finally, remember to take advantage of the Up To 20% discount in our merch store and bag yourself some of that exclusive crypto merch!

Guy your crypto guy

Guy Turner

Guy is one of the founding members and face of the Coin Bureau. Like many of us, he is just an average joe who became “crypto curious” back in 2013. After recognising the potential of blockchain technology, Guy set off on a mission to create crypto educational content, working with others to start the Coin Bureau website and released our first video on YouTube in 2019. You can learn more about him in his Who is Guy? blogpost.

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