Fed raises rates, Zcash climbs 23% after Paradigm backing

The US Federal Reserve raised interest rates by 25 basis points on Tuesday to a range of 3.75% to 4%. It was the first rate hike since July 2023, and the decision by Fed Chair Warsh was unanimous, with all twelve governors in favour. Sixteen of the eighteen policymakers expect a further rate increase this year.

The rate hike is notable because President Trump has opposed it and has advocated for a cut to 1%. Despite that pressure, the Fed decided to press ahead. Major banks such as JPMorgan, KeyCorp and BNY immediately raised their prime rate to 7%, which means credit card rates are the first to rise.

In brief:

• The Fed raised rates despite pressure from the White House to lower them instead
• Zcash rose 23% after it emerged that Paradigm founder Matt Huang holds the coin
• Congress backed a bill for a permanent strategic Bitcoin reserve

Energy prices rise, geopolitical tensions grow

The diesel price hit a record $6.29 per gallon on Wednesday, an increase of almost 80% this year caused by supply disruptions in the Middle East. This presents the Fed with a dilemma: the rate hike runs counter to an energy shock that flows directly back into inflation.

Congress, meanwhile, passed a new sanctions package against Russia by 262 votes to 159, which Trump is expected to sign shortly. The law gives him the power to impose tariffs of up to 100% on countries that buy Russian oil and gas.

Zcash climbs sharply, Bitcoin virtually unchanged

Zcash jumped 23% on Thursday to around $1.369 after it emerged that Paradigm co-founder Matt Huang’s company holds ZEC and positions it as a privacy coin and a complement to Bitcoin. Bitcoin itself rose less than 1% to $76.258.

Sentiment around privacy-focused coins differs sharply from that around Bitcoin, which in recent months has been moving between support and resistance around certain levels. With Paradigm’s backing, Zcash clearly received a boost.

Congress backs permanent Bitcoin reserve

The House Financial Services Committee voted 28 to 21 on Thursday in favour of the American Reserve Modernization Act, which would codify the strategic Bitcoin reserve under Trump. Coins in the reserve must be held for at least 20 years.

The proposal marked a crossroads in Bitcoin politics. A day earlier the Clarity Act had collapsed in the Senate, but the House Ways and Means Committee, by contrast, gave the green light immediately afterwards to the Digital Asset Tax Certainty Act by just 5 votes to 38, aimed at the tax treatment of small crypto payments.

Blockchain innovation and the AI race

On Thursday Circle switched on the Arc mainnet with USDC as the native gas token, so that transaction fees are priced in dollars. Eleven founding validators went live, including BlackRock, Visa, Mastercard and DTCC.

Ripple, meanwhile, published XRPL AI Starter Kit v1.1 with Stripe’s Machine Payments Protocol and an Open Wallet Standard that lets agents pay in XRP without access to private keys. Bitcoin Core 32.0 announced its first release candidate on 14 September, with a target date of 10 October. The update adds a second fee estimator that reads transactions in the mempool and can recommend lower fees.

On the AI front, Huawei has announced 2027 launches for two Ascend AI chips: the 960DT in Q1 and the 960PR in Q3, a direct assault on Nvidia’s dominance in Chinese data centres.