Missouri House Bill 594, a bill that would eliminate capital gains tax in the US state, has passed a vote in the state House of Representatives and now heads to Missouri Governor Mike Kehoe’s desk for signature.

According to attorney Aaron Brogan, the bill stipulates a 100% income tax deduction for any capital gains income because the Missouri tax code does not explicitly distinguish between capital gains and income tax.

Missouri House Bill 594 proposes exempting capital gains from income taxes. Source: Missouri House of Representatives

Brogan told Cointelegraph that the specific mechanism to exempt capital gains taxes outlined in HB 594 is unique and compared it to a similar income tax deduction in the federal tax code. The attorney explained:

“The most natural comparison is the state and local tax (SALT) deduction that the federal government offers — where the Internal Revenue Code (IRC) permits individuals to deduct a certain amount of tax paid in state and local taxes. This is the inverse, which I have never seen before.”

The bill’s timing is significant in that it follows proposals from US President Donald Trump to overhaul the country’s income tax system through comprehensive reform.

Related: US lawmaker targets crypto investors using Puerto Rico as a tax haven

Trump proposes eliminating federal income tax in the United States

Trump has proposed offsetting federal income taxes or eliminating the income tax and replacing the federal tax revenue with money raised through import tariffs.

“When Tariffs cut in, many people’s income taxes will be substantially reduced, maybe even completely eliminated. The focus will be on people making less than $200,000 a year,” the president wrote in an April 27 Truth Social post.

Trump added the plan will create more jobs in the United States as factories return to avoid import duties on their finished products.

Despite this, the market reaction to the tariffs has been overwhelmingly negative, with the stock market recording trillions of dollars in losses in response to tariff headlines and crypto markets shedding hundreds of billions in value.

Additionally, bond yields spiked following the tariff announcements — a sign that investors were rejecting US bonds, which are traditionally seen as a flight to safety.

Magazine: Financial nihilism in crypto is over — It’s time to dream big again

Layer 2s have been a great blockchain success story. They’ve reduced congestion on the Ethereum mainnet, driving down gas fees while preserving security.

But maybe they’ve become too successful, drawing chain activity and fee income from the parent that spawned them? At least that’s what some are suggesting lately, most recently at Cornell Tech’s blockchain conference in late April.

Indeed, some think Ethereum should be a little greedier, or at least fight harder for a bigger part of the revenue pie, particularly sequencing fees. 

“People in the Ethereum Foundation [the nonprofit that supports the Ethereum ecosystem] will tell you that, ‘Yes, we effed up by being too ivory tower.’ I have heard that multiple times,” said David Hoffman, an owner at Bankless, during a panel discussion at the Cornell Tech event in New York City on April 25. 

Hoffman, left, at Cornell Tech’s blockchain conference. Source: Andrew Singer

Elsewhere, Hoffman has urged Ethereum to make a “strategic pivot,” noting that the crypto environment has changed in the last few years. Ethereum no longer has the “luxury of being a peace-time research project…. exploited by its competition.”

L2s are reaping millions of dollars in transaction order fees (sometimes called sequencing fees), but none of these revenues are being passed on to Ethereum, according to James Beck, head of growth at ENS Labs and another speaker at the New York City conference. Beck told Cointelegraph:

So, this cultural layer of podcasters and researchers are saying, ‘Well, the price of ETH has been dropping compared to these other tokens. What do we do to make Ethereum more powerful?’

In short, Ethereum is a neutral verification layer, but the Ethereum mainnet is not being fairly compensated for the work that it is doing. Centralized for-profit L2s like Base, Optimism and Arbitrum are gathering the lucrative sequencing fees while enjoying the security and liveness guarantees of the Ethereum mainnet at relatively little economic cost.

L2s soared after Dencun upgrade

L2 rollups are a recent innovation; they only emerged in 2023. The idea was to reduce chain congestion and gas fees by moving transaction processing from the main blockchain (layer 1) to separate chains that sit atop the mainnet (L2s). But transaction processing is arguably the most profitable part of the revenue game, especially when users opt to pay priority fees to get their orders processed faster.

Fee-sharing was rarely much of an issue before Ethereum’s March 2024 Dencun upgrade, which introduced blob transactions to help scale layer 2s. Blobs significantly reduced the cost for L2s to post data to Ethereum, allowing them to operate more profitably, CoinMetrics researcher analyst Tanay Ved told Cointelegraph this week. 

Since then, L2 user demand has soared, especially on Base, the L2 launched by Coinbase in August 2023 on the Ethereum mainnet. 

As Ved noted in an April 8 blog, Base has earned a total of ~$98 million in revenues from user-transaction fees (including base and priority fees), “while paying only ~$4.9M to the Ethereum base layer, resulting in a total estimated profit of $94M since the Dencun upgrade.” 

Ved added:

This dynamic has led to many questioning whether Layer-2s are net positive for Ethereum, or whether they are ‘extractive.

Base’s response

Asked about fees, a Base spokesperson told Cointelegraph, “Today, Base already pays Ethereum fees for every transaction on Base. All transactions are settled on Ethereum, and so far, Base has paid Ethereum more than $20 million in settlement fees since Base’s inception.” One can see these fees on Token Terminal under “cost of revenue,” the spokesperson added. 

“Overall, Base makes getting onchain more accessible with fast and cheap transactions and helps grow the Ethereum ecosystem by onboarding more users, builders, apps and assets, all of whom are transacting in ETH and driving demand,” said the spokesperson.

Related: Institutions break up with Ethereum but keep ETH on the hook

However, in many, if not most months, Base’s overall fees are roughly 10 times the amount paid to Ethereum for settling trades, according to examination of the referenced Base financial statement. In April, for instance, the most recent full month, Base reaped $3.7 million in fees, but only $305,000 was delivered to Ethereum as settlement fees — about 8% of total fees.

Still, maybe things aren’t quite so dire. Even if fees are out of kilter now, the imbalance may not last, others caution. Ethereum hard forks like Pectra, which went live yesterday (May 7), and Fusaka, scheduled for late 2025, will increase blob throughput. “This means L2s will be able to post more blobs, potentially driving higher total blob fees to mainnet,” Ved told Cointelegraph. 

Ethereum is already consistently hitting the current blob target of three per block, as the chart below shows. “Pectra will raise this to six blobs per block — with a max of nine — creating room for increased fee capture as L2 activity scales,” added Ved.

Average blobs per block and their total blob fees (USD) on Ethereum. Source: CoinMetrics

Are “based rollups” the answer?

Some Ethereum researchers, podcasters — and even L2s — have been leaning into “based rollups” as a more permanent way to fix the fee problem and provide better security in the bargain. Here, transaction ordering (i.e., sequencing) would be done on the mainnet, not on L2s.

The sequencers used by Optimism, Arbitrum One, Base and others are more prone to attack or failure, given that they are centralized, with a single point of failure, some researchers say. Polygon’s Jarrod Ward writes:

If a centralized sequencer goes down, the rollup effectively stops doing its job entirely. It stops handling transactions from users on the L2 and also stops sending batch data back to Ethereum.

“Layer-2 sequencers have become dangerously centralized,” added Tom Ngo, executive lead at Metis — an Ethereum layer-2 blockchain. 

Last June’s $2.6-million hack of Ethereum layer-2 blockchain Linea drove home to Ngo and others the importance of decentralization and the perils of centralized sequencers. 

Related: ‘Vitalik: An Ethereum Story’ is less about crypto and more about being human

Several based-rollup L2s have launched this past year. Taiko Alethia, the first and largest, went live in May 2024. A year later, it had $148.3 million in total value secured — ranking 14th on L2Beat’s list of L2s, though far behind leader Base’s $12.06 billion. 

Top Ethereum layer 2s ranked by total value secured. Source: L2Beat

Speedwise, Taiko was averaging a respectable 20.3 user operations per second (UOPS) on May 7, a far cry from Base’s 86.3 UOPS, but on par with Arbitrum One’s (21.6 UOPS) and significantly better than Optimism’s (10.3 UOPS).

A tax on L2s?

Another idea floated in the Ethereum community is imposing a sort of tax on L2s. But doing this could have some unintended consequences, according to Ved. It could make L2s less competitive. It also risks “leakage of activity to competing layer 1s outside the Ethereum ecosystem.” Activity that flows to Base today could flow instead to Solana or other L1s, Ved said.

There could be philosophical issues, too, were Ethereum to lay a surcharge on its L2s. Ved noted:

A tax could be seen as contrary to Ethereum’s ethos of decentralization, which would opt for market-driven forces rather than enforcing a tax.

 Generally speaking, the Ethereum Foundation seems to be prioritizing long-term growth over short-term revenue, Ved explained. Proposals like EIP-7762, though, which raises the minimum blob base fee to speed up price discovery during demand surges, could drive more fee income to Ethereum mainnet, having an effect like a tax. 

Social pressure?

According to ENS Labs’ Beck, it may take some social pressure to get the leading centralized L2s to voluntarily give up their sequencing fees. Other L2s like Linea may need to step in and say to centralized L2s something along the lines of: “Look, you guys have these risks inherent in a more centralized design, and here’s the chance to bake [the order processing] into Ethereum, which is more decentralized.”

Along these lines, ENS took part in a three-day workshop in the UK in January with leading researchers and developers from entities like Linea, Status, OpenZeppelin, Titan, Spire Labs and the Ethereum Foundation. The immediate task was how to create scalable, decentralized infrastructure for ENS Labs’ Namechain, but also to bring together various Ethereum ecosystem teams to collaboratively solve L2 interoperability challenges with based rollups. 

It’s not always easy to get things done in a flat (non-hierarchical), multi-voice entity like Ethereum, Beck acknowledges. “Ethereum is a decentralized ecosystem. You can’t get everyone on the same page all at once.” But a collaboration like the recent one that took place in the UK is a start. 

Cornell Tech conference panelist Hoffman expressed some confidence that Ethereum could pivot and “turn the layer 1 into a rollup” with processing speeds comparable to today’s L2s. 

As noted, Hoffman has criticized the Ethereum Foundation for being too insular and academic, but he sees signs that things may be changing now, writing recently:

The appointment of co-executive directors Tomasz Stańczak and Hsiao-Wei Wang marks a new era of accountability, direction, and internal cohesion.

“I’m feeling optimistic,” added Beck. “Ethereum still has the most assets locked for DeFi; the most stablecoins are on Ethereum. BlackRock has a fund that’s settling on Ethereum.” 

Put another way, Ethereum is still well-positioned to provide the infrastructure for the “network of networks” — i.e., the smoothly interacting network of multitudinous private and public blockchains that many hope will be the technology’s future.

Magazine: 12 minutes of nail-biting tension when Ethereum’s Pectra fork goes live

Opinion by Jonathan Farnell, CEO of Freedx

It’s 2025, and over 560 million people worldwide are already using cryptocurrency — roughly 17 times the population of Tokyo. That’s a vibrant community, yet for every user who’s embraced it, billions more stand on the sidelines, put off by the complicated interactions and clunky interfaces of protocols, platforms, decentralized apps (DApps), and mobile applications. Why? Blockchain technology offers game-changing potential — decentralized ownership, secure trades — but let’s face it: Most people still find it intimidating, risky, and confusing. User experience (UX) might just be the deciding factor in whether cryptocurrency achieves mass adoption or remains a niche segment.

Take complexity. A 2024 Chainalysis report pointed out that 43% of would-be crypto users shy away from the technical tangle of private keys and gas fees. Have you ever lost a seed phrase? You’re not alone. More than $200 billion in crypto has been lost forever because of it. That’s not just a statistic — it’s a gut punch for someone who thought they’d unlocked the future of finance. Streamlining this chaos could fling open the doors to 5 billion internet users, pushing crypto’s $2.91 trillion market cap, as reported by Cointelegraph, into the stratosphere — potentially reaching $4 trillion in the second quarter of 2025.

From headaches to high fives

Many decentralized finance (DeFi) apps currently feel like a hacker’s playground — all data and API integrations, but nothing intuitive that speaks to an ordinary person. Simply swapping cryptic jargon for plain English would be a solid start. Consider swapping “gas fees” to “transaction costs.” Those 12-word seed phrases send users into panic mode, but a familiar gear icon for settings could put users’ minds at ease. Suddenly, managing a wallet isn’t a high-stakes game anymore. It’s just another tool.

This isn’t about dazzling users with blockchain’s inner workings. Most people don’t care about the tech under the hood, just like they don’t ask whether their favorite app runs on AWS or Google Cloud. Blockchain isn’t a shiny new internet. It’s infrastructure — powerful, but invisible, when done right. Users want solutions — quick payments, secure savings, and easy access. Streamlined experiences could draw in everyday folks — retirees sending cash to grandkids, small business owners managing cash flow — expanding cryptocurrency’s reach. It’s about turning a daunting process into something approachable, paving the way for broader economic effect. 

Build confidence through clarity

Trust is another sticking point. Transactions can feel uncertain, with phishing scams and tales of lost savings heightening unease. Vague error messages like “transaction failed” frustrate users, but specific feedback — “insufficient funds, please top up your balance” — offers reassurance. Guides on staying secure and pre-set options to avoid errors can make the system feel reliable, not reckless. When technology fades into the background, confidence takes center stage.

Design quality shapes perceptions, too. Unpolished interfaces raise doubts about credibility, especially for those accustomed to refined digital tools. Clean, professional layouts signal trustworthiness, while clear benefits — faster payments and control over data — make the case compelling. This shift could reposition cryptocurrency as a practical alternative, not a gamble. It’s not about buzzwords like “trustlessness” or “censorship resistance.” Most users don’t lose sleep over those ideals. They care about quality, ease, and value, not the blockchain badge.

Adoption depends on usability

Cryptocurrency could reshape how people trade, save, and connect — growing from 617 million users to billions. Success hinges on accessibility. Platforms that prioritize straightforward design already see more engagement and trust, driving market potential into the trillions, rivaling traditional finance. Poor usability, though, risks leaving this vision unrealized. The promise of self-custody or transparency won’t lure the masses if the experience feels like a chore.

Recent: Stop making crypto complex

Challenges like regulation and old habits persist, but confusing experiences remain the most significant barrier, keeping everyday users at arm’s length. Blockchain’s promise is real, yet its breakthrough relies on design that feels human and dependable. People don’t adopt tools because they’re built on cutting-edge tech. They adopt tools because they solve real problems — cheaply, simply, and reliably. Cryptocurrency stands ready to expand — it needs to meet people where they are, not where the tech wants them to be.

Focus on benefits, not features, and the market could soar. Consider a freelancer who is paid instantly across borders or a parent gifting digital cash without a hitch. That’s what hooks users — not the mechanics of account abstraction or zero-knowledge proofs. Platforms that nail this could turn crypto into a daily staple, boosting adoption and market value. Exchanges leading the charge with intuitive design already prove it: Usability drives growth. Cryptocurrency’s future isn’t about preaching blockchain’s brilliance — it’s about making it so seamless no one even notices it’s there.

Opinion by Jonathan Farnell, CEO of Freedx.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.