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Tornado Cash Banned in the US, Game dApps Thriving, and More!
Bitcoin barely moved over the past seven days while Ethereum saw an increase in price by 4.9%. Avalanche recorded a 21.31% increase week-over-week, following its listing on Robinhood on August 8 alongside Stellar. Other outliers from this past week are Chainlink and Polkadot, each recording an increase of 19.7% and 16.27% respectively, in addition to Binance Coin whose price increased by almost 14%; all on the back of developments which we will delve deeper into further in this newsletter.
Key Takeaways
• New bipartisan bill wants to hand jurisdiction over BTC and ETH to CFTC
• Wallet addresses holding 100 ETH or more increase ahead of Merge
• USDT, FRAX to honor redemptions on new POS ETH chain, won’t support POW fork
• Gaming dApps account for 60% of all blockchain activity in July
• Multiple ETHPOW forks are expected to launch post-merge
Macro, Regulations; Spot, and Derivatives Markets
Bank of England raised interest rates to 1.75% in the biggest increase since 1995, while estimating inflation to peak at 13.3% in October. July’s US inflation data is scheduled to be released on August 10 and the next Federal Reserve meeting is slated to take place on September 21.
In its earnings report, Microstrategy reported a $918M impairment charge on its Bitcoin holdings in Q2, compared to $414.2M for Q2 of 2021. On the back of that news, former CEO of Microstrategy Michael Saylor stepped down to assume the role of executive chairman to focus primarily on innovation and long-term corporate strategy, while continuing to provide oversight of the Microstrategy’s Bitcoin acquisition strategy as head of the Board’s Investments Committee.
A new bipartisan legislation wants to hand the regulatory authority over Bitcoin and Ethereum to the Commodities Futures Trading Commission (CFTC). There has been a long dispute in Congress over whose place it is to regulate cryptoassets, the Securities and Exchange Comission (SEC) or the CFTC. The Digital Commodities Consumer Protection Act of 2022 grants the CFTC ”exclusive jurisdiction” over cryptocurrency trades that meet commodities law. Aiming to bring more clarity into the space, the bill aims to introduce a new term “digital commodity,” leaving it up to the CFTC to define.
The SEC charged 11 people linked to Forsage for fraud, calling the decentralized smart contracts platform a textbook pyramid scheme. A few days later, documents were leaked to the public showing that the SEC had open cases on all US-based crypto exchanges, along with Binance. More law enforcement that took place last week:
• New York State Department of Financial Services marked its first crypto law enforcement action by fining Robinhood $30M for violating cybersecurity and AML laws, an event the company has been expecting since last year.
• Celsius is facing a lawsuit from over 300 of its custody clients claiming rightful ownership of $180M of firm’s assets locked in bankruptcy proceedings.
• Portuguese banks closed accounts of crypto exchanges, on the back of “suspicious transactions.”
Senator Elizabeth Warren of Massachusetts wants Office of the Comptroller of the Currency to rewrite guidelines permitting banks to hold reserve-backed stablecoins like USDC and USDT. Meanwhile, the European Central Bank called stablecoins and Bitcoin problematic while calling central bank digital currencies a “holy grail” for cross-border payments in a report published earlier this month.
On-chain Indicators
Figure 1: Lightning Network Capacity
Source: Glassnode
The Lightning Network, which allows for near-instant transaction finality, has almost 4.5K BTC in its capacity, which means over $100M are ready for peer-to-peer payments on the Bitcoin blockchain network. That is 500 more BTC since June.
Figure 2: Addresses with 100 ETH or more
Source: Glassnode
Ethereum is leaving 2018 levels in terms of wallets holding 100 ETH or more. Over the past week, wallets holding 100 ETH or more have increased by more than 200.
Media Coverage
Our Director of Research Eliezer Ndinga was featured on Blockworks to talk about price developments and market sentiment. You can read more here.
In other news, our very own research associate Carlos Gonzales was featured on Forbes to discuss Litecoin. You can read more about it here.
Last but not least, we’re thrilled to welcome Sherif El-Haddad as 21Shares’ first Head of Middle East Sales as we expand into new markets. You can read more here.
News
Tornado Cash Just Got Banned in the US
What happened?
The US Department of Treasury banned Tornado Cash, a decentralized protocol used to obfuscate the trail of transactions for privacy, for facilitating the laundering of the proceeds of cybercrimes, according to the statement. The US Treasury said that Tornado Cash has been used to launder more than $7B worth of cryptoassets since it launched in 2019. That figure amounts to the total value of cryptoassets that have been sent through Tornado Cash since launch.
Why does it matter?
The move comes after the US Treasury linked the $600M+ Ronin Bridge exploit to North Korean cybercriminal Lazarus Group, which sent approximately $80.3M worth of ETH through Tornado Cash, according to blockchain analytics firm Elliptic.
Back in July, Chainalysis revealed that 10% of all funds coming from illicit addresses are sent to crypto mixers, such as Tornado Cash and Blender.io which has been recently sanctioned earlier by the US on the back of the infamous Axie Infinity hack.
Tornado Cash announced in April that it’s using Chainalysis’ oracle contracts to block wallet addresses sanctioned by the US. ”Maintaining financial privacy is essential to preserving our freedom; however, it should not come at the cost of non-compliance,” said the Tornado Cash team.
Welcome to the State of Crypto, the weekly investor-focused newsletter from 21shares that dives into the key trends driving the digital asset landscape.
This week, we’re exploring:
- How to identify potential winners in digital assets?
- Off the Block podcast: EY’s Paul Brody on Ethereum, privacy, and enterprise readiness.
- Reserve your spot: discuss the 21shares Market Outlook 2026 with its authors.
How to identify potential winners in digital assets?
As this asset class matures, the noise grows louder, making it all too easy for investors to swing between hype and fear. This report helps investors navigate the $3 trillion crypto market by distinguishing Bitcoin’s store-of-value role from the economic models of platforms like Ethereum and Solana. Using security, retention, revenue, and adoption metrics, it highlights the fundamentals that matter most in identifying long-term winners across the sector.
EY’s Paul Brody on Ethereum, privacy, and enterprise readiness
In the latest Off the Block episode, EY’s Global Blockchain Leader Paul Brody identifies privacy on public networks as the central hurdle for enterprise adoption, discussing new solutions, and forecasting that 2026 will be the “golden year” of Ethereum privacy.
Reserve your spot: discuss the 21shares Market Outlook 2026 with its authors
To own the future, you must first be able to see it. The 21shares State of Crypto: Market Outlook 2026, to be published December 11, is essential reading for navigating the next chapter of the digital asset economy. Secure your spot for a live webinar with the authors on Wednesday, December 17th, at 4:00 PM CET and seize the opportunity to ask your questions firsthand.
Welcome to the State of Crypto, the weekly investor-focused newsletter from 21shares that dives into the key trends driving the digital asset landscape.
Börshandlade fonder utbildning
This week, we’re exploring:
- Bitcoin: where things stand and what to monitor
- Off the Block podcast: Vivek Raman’s Vision for Ethereum on Wall Street
Bitcoin: where things stand and what to monitor
Following a month of expectation resets, the crypto market’s tight connection to macro policy and liquidity is clear. Our research team provides an analysis of Bitcoin’s recent price drop and the signals to monitor right now. Our conviction is that the current market structure is built for consolidation, not reversal, barring any systemic risks.
ETF marknadsnyheter
Will Ethereum become the infrastructure backbone of Wall Street?
Tune in to Off the Block’s latest episode to hear why Vivek Raman made the switch from traditional finance to crypto, his company’s mission to rewire the infrastructure of Wall Street using Ethereum, and how the tokenization of real-world assets (RWAs), ETFs and stablecoins are powering the future of digital assets.
Aktivt förvaltade fonder
Quicklinks
What we’re following
- The next wave of economic data is critical for refining views on economic strength. Early December’s CPI and PPI reports will be especially important for confirming or adjusting inflation expectations ahead of the next Fed meeting.
- Data on the labor market (such as job numbers and the unemployment rate) will also be released, which are vital for understanding wage and employment trends.
- The Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, is expected on December 5. This directly steers Fed expectations and drives risk appetite for crypto.
- The Employment Situation (Non-Farm Payrolls or NFP), a crucial labor report, is also expected on December 5. It provides key insight into economic strength, which can cause strong volatility in crypto through shifting rate expectations.
Connect with us today
If you have any questions or want to discuss a product in detail, please visit our website at www.21shares.com.
Research Newsletter
Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com
Disclaimer
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.
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