BTC is currently trading around $60,700 (it touched $58,500 early this morning) and ETH around $4,300. 95 of the top 100 tokens by market cap are in the red today, with only LEO and SAND materially above zero with both up 6%. The global crypto market cap is $2.73T, down 8.3% over the last day. DeFi Total Value Locked is ~$256b and BTC dominance is around 44%.
The weakness in the crypto markets is being attributed to US President Biden signing the infrastructure bill into law, profit taking post Bitcoin’s Taproot upgrade, Twitter ’s CFO saying the company won’t be adding crypto to its balance sheet, the US dollar index hitting a 16-month high, China’s National Development and Reform Commission announcing plans to double down on eliminating mining activities, and the unwinding of long positions as liquidations totaled $885m.
The concern around the US infrastructure bill for cryptocurrencies is its controversial crypto transaction tax reporting requirements and the expanded definition of a broker for IRS purposes. This expanded definition may potentially capture a broad swath of the industry, including miners and other parties that don’t facilitate transactions. In addition, a second provision in the bill amending tax code section 60501, which revolves around reporting detailed information for large transactions to the government, is also causing concern, given crypto compliance difficulties and the fact that violations are a felony. There is still hope the reporting requirements won’t be as draconian as written, however, as the Treasury department has yet to explain how it plans to interpret the bill and publish guidance for businesses to comply with it (an August Bloomberg article citing an anonymous source suggested the Treasury may take a soft hand). Moreover, Senators Wyden and Lummis plan to introduce an amendment to the infrastructure bill that would exclude individuals developing blockchain technology from the reporting requirements.
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