Here are the three biggest crypto stories of the past week

Quick Take

  • Here are some of the most important updates of the week’s news cycle.

  • Major crypto assets fell and Tether clarified its stance on US sanctions.

  • The week also saw the Ethereum Foundation confirm the September schedule for The Merge.

It was relatively calmer in crypto this week. Still, there were some key developments in the last several days. 

Major crypto assets slid, the Ethereum Foundation confirmed dates for The Merge, and finally stablecoin issuer Tether said that it wasn’t yet complying with Tornado Cash-related sanctions.

Ether and Bitcoin slide after Fed chair speaks on interest hike

First up, here's a quick review of the market. This past week ended with major cryptocurrencies, bitcoin (BTC) and ether (ETH), declining in price after Federal Reserve Chairman Jerome Powell said he plans to raise US interest rates further to bring down inflation.

Usually, an interest rate hike means bad news for riskier assets like cryptocurrencies. As such, the certainty of Fed rate hikes hit crypto markets. Since Powell’s remarks on Friday morning, bitcoin has fallen 7% as it went from $21,750 to now trading at $20,200, per CoinGecko.  

Ether (ETH), the second-largest crypto asset, took a steeper downturn. Since Friday, ETH has fallen by more than 11%, declining from about $1,700 to now around $1500. ETH hit a new multi-week high of about $2,000 on 14 August. Still, that rally has faded amid weak buying interest as the Fed’s monetary policy news took precedence over market sentiments.

The Merge dates confirmed

Even if the market trend remains bearish, The Merge brings hope regarding a development to which many in the crypto space are looking forward. On Wednesday, the Ethereum Foundation confirmed that The Merge is now less than three weeks away. The Ethereum team has planned a switch to proof of stake since 2016 and it looks like it’s finally closing in on the goal.

The foundation released a final update detailing The Merge schedule. The process will begin with the Bellatrix upgrade on September 6. After this, the proof-of-work chain will migrate to proof-of-stake upon hitting a specific total difficulty value, estimated to occur on September 15. 

Tether says it's not freezing Tornado Cash addresses

On August 8, the US Treasury Department’s Office of Foreign Asset Control (OFAC) placed sanctions on Tornado Cash, a smart contract privacy tool and mixer on Ethereum, saying that criminals had used the service to launder more than $7 billion worth of virtual currency. OFAC also placed sanctions on 44 crypto addresses tied to the app. 

 During the week, Tether, issuer of USD Tether (USDT), released a statement saying that it cannot now comply with the sanctions by freezing assets in the sanctioned addresses. Tether said it had not received any requests from US law enforcement regarding the sanctioned addresses with ties to Tornado Cash. Tether added that "unilaterally freezing secondary market addresses could be a highly disruptive and reckless move." 

This came in sharp contrast to Circle, the issuer of the USD Coin (USDC) stablecoin, which had voluntarily frozen more than 75,000 USDC held in addresses sanctioned by OFAC shortly after the sanctions were announced. 

Meanwhile, the crypto sector is monitoring the discussion on potential implications of Tornado Cash sanctions. On Tuesday, Representative Tom Emmer, R-Minn., wrote a letter to Treasury Secretary Janet Yellen asking how the department will enforce the sanctions.

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