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Monthly Market Review - April 2023

This month we will look at the successful Ethereum Shanghai upgrade and how different jurisdictions regulate the digital asset market.



Price (1 April 2023)



Price (30 April 2023)



% Return



When Ethereum upgraded to version 2 (or ETH2), it moved from proof of work to proof of stake. This adjusted the consensus mechanism and removed the mining requirement to reach consensus, drastically reducing the computing power required by the network (and associated energy usage) and the rate of ETH emission. ETH is required to use the network, and some of this is burnt; with high usage, the supply rate can turn negative. This is akin to oil; hence, Ethereum is called digital oil compared to Bitcoin’s digital gold. The graph below shows how the supply is now slowly trending downwards.

Source:, rebased to the supply at the merge. A graph with numbers can be found here:

As part of the ETH2 upgrade, investors could stake their ETH but couldn’t unstake and sell it until after the Shanghai upgrade, which occurred on April 13. The market was expecting significant price action around this period, but the upgrade was very smooth, with unexpected calmness in the market. There was a modest jump in ETH prices after the successful upgrade, but these had retracted by April 21st .

Overall, the Ethereum team has continued to impress with its consistent and successful upgrade schedule. With the latest upgrade, investors can benefit by staking in the most prominent smart contract network. Future upgrades will include increasing the number of transactions each block can perform; this should increase the useable block space, decrease the cost per transaction and increase the attractiveness of using Ethereum compared to other layer-one blockchains.

One of the themes of the last six months has been the tightening of control of US regulators over digital assets. The tightening is through regulators levelling charges and pressuring banks to reconsider serving digital asset businesses. For example, as we have previously discussed, the SEC has been trying to regulate digital assets by declaring that many assets are securities, so exchanges should fall under their purview. However, the businesses are frustrated as they believe there needs to be a workable process to register with the SEC. Congress has become frustrated and absconded the head of the SEC, Gary Gensler, who refused to indicate if he believed Ethereum is a security.[1]1 The need for a clear rulebook and the infighting between the SEC and CFTC makes it hard for digital asset businesses to operate in the US.

However, not all regulators have taken such a hostile stance toward digital assets. The United Arab Emirates (UAE), Switzerland and Hong Kong have actively promoted themselves as digital asset destinations with precise regulations. These are respected jurisdictions, making them attractive for US-based digital asset companies with international ambitions, such as Coinbase, who feel they need more certainty than the US regulatory regime provides.

The divergence between different regulators isn’t surprising, as it has been consistent for the last five years. However, until late last year, the US showed signs of being more friendly towards digital assets, whereas now it appears to be getting stricter. Tightening up while other regulators open will backfire on the US, which risks losing its digital asset lead as more companies and entrepreneurs move abroad to operate in markets with more regulatory clarity.

[1] See this tweet from Congressman McHenry: The whole hearing can be found, with the Ethereum exchange being found at 16:15


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