Crypto Regulation News: Texas house passes crypto-friendly bill, New York bill proposes to ban crypto mining for 3 years over carbon concerns, Binance is reportedly under investigation from IRS and Justice Department, and more!
Vol. 68, 3rd May — 17th May
TL;DR
- SEC is warning investors about the risks of investing in the top cryptocurrency
- The U.S. Securities and Exchange Commission (SEC) chair Gensler calls for Congress to work on investor protections for crypto exchanges
- Seven members of the U.S. Congress sent a letter urging the Financial Accounting Standards Board to establish clearer guidance on digital assets
- Members of the Texas House of Representatives just passed a proposed piece of legislation which recognizes the use of cryptocurrencies in commercial transactions.Yellen has announced her intention to appoint Michael Hsu as First Deputy Comptroller of the Office of the Comptroller of the Currency (OCC)
- Cryptocurrency exchange Binance is reportedly facing an investigation by the U.S. Internal Revenue Service as well as the Department of Justice, according to a report by Bloomberg.
- SEC enforcement actions cost crypto firms and individuals $1.7B in penalties
- A new bill on the floor of the New York State Senate aims to prohibit crypto mining centers from operating until the state can assess their environmental impact.
- U.S. Office of Foreign Assets Control is seeking blockchain analytics tools
- New York Attorney General (NYAG) Letitia James requested a temporary restraining order and other legal action against crypto app company Coinseed.
- XRP holders are petitioning the U.S. SEC head Gary Gensler to terminate the lawsuit against digital payments giant Ripple
- Trial of former BitMEX executives set for next March
- A court in northern California has ordered Kraken to provide information on users who traded more than $20,000 between 2016 and 2020 to the IRS.
- Grayscale’s diversified crypto fund files to become SEC reporting company
- Crypto.com becomes first cryptocurrency platform to receive MFSA Class 3 license
- UK will likely need to issue a digital currency, says BoE deputy governor
- Diginex’s crypto custody arm receives green light from UK financial watchdog
- South Korea’s central bank is the latest entity seeking powers to monitor crypto trading activity in the country
- Argentina’s tax authority AFIP reportedly ordered domestic crypto exchanges and payment firms to provide monthly reports of all kinds of operations
- Iran seems to be attempting to ban foreign-mined cryptocurrencies for payments
- Turkish government to track crypto transactions over $1,200
- Indian startup organization proposes regulatory framework for crypto
- Indonesia considers capital gains tax on cryptocurrency trades
- Kazakhstan’s government to create a roadmap for developing the crypto market
- And more!
Opinions
Many Crypto Assets Are Securities, Says New Head of SEC Gary Gensler: Newly appointed Chair of the U.S. Securities and Exchange Commission (SEC) Gary Gensler is talking about regulating the nascent crypto sector.
In an interview with CNBC’s Squawk Box, the new Chair, who was sworn in just last month, discusses what he believes the SEC’s role will be in regulating the crypto markets. Gensler reveals that he considers many crypto assets that are currently on the market as securities, and that he does believe the SEC has license to make that determination.
“I think to the extent something is a security the SEC has a lot of authority and a lot of crypto tokens are indeed securities. The prior chair has indicated that [and] the prior SEC brought numerous enforcement actions to bring some of those security or investment contract tokens into the rules.”
Although Gensler believes that the categorization of many crypto assets needs to be ironed out, the SEC Chair asserts that, most pressingly, investors trading Bitcoin, an asset that the SEC has already determined is not a security, need to be protected.
“There are some [assets] like Bitcoin, if I could just focus on that, and that’s about half of this $2 trillion asset class right now. It’s a digital scarce store of value, but highly volatile and there’s investors that want to trade that and trade that for its volatility.
I think we need greater investor protection there. And we don’t have a federal regime overseeing the crypto exchanges, so if an investor wants to trade Bitcoin, understanding it’s highly volatile, highly speculative… If they want to trade on that, we [need to] have some investor protection in place and that’s what I think is a gap in our system right now.”
USA
SEC Issues Stark Warning on Volatility, Potential for Manipulation in Bitcoin Futures Market: The U.S. Securities and Exchange Commission (SEC) is warning investors about the risks of investing in the top cryptocurrency. In a new statement, the SEC expresses concern regarding mutual funds taking positions in Bitcoin futures.
“Investors should understand that Bitcoin, including gaining exposure through the Bitcoin futures market, is a highly speculative investment. As such, investors should consider the volatility of Bitcoin and the Bitcoin futures market, as well as the lack of regulation and potential for fraud or manipulation in the underlying Bitcoin market.”
Congressional lawmakers push for clearer accounting standards for digital assets: On May 12, seven members of the U.S. Congress sent a letter urging the Financial Accounting Standards Board to establish clearer guidance on digital assets. The Blockchain Caucus is also putting together a series of educational briefings on blockchain and crypto for Congress.
House Lawmakers Approve Breakthrough Pro-Crypto Bill in Texas: Members of the Texas House of Representatives just passed a proposed piece of legislation which recognizes the use of cryptocurrencies in commercial transactions. House Bill 4474 seeks to insert a definition of the term ‘virtual currency into the state’s Uniform Commercial Code (UCC), the set of laws that governs business transactions in the US.
“Section 9.102, Business & Commerce Code, is amended by adding Subsection (29-a) to read as follows: (29-a) ‘Virtual currency’ means a digital representation of value that functions as a medium of exchange, unit of account, and/or store of value and is often secured using blockchain technology.”
SEC chair Gensler calls for Congress to work on investor protections for crypto exchanges: Gensler is already getting the SEC to react to Robinhood volatility. While testifying during a May 6 hearing of the House Financial Services Committee on market volatility surrounding GameStop and other meme-ified securities, Gensler fielded a question from Ranking Member Patrick McHenry about concrete steps “to further the crypto market.”
Yellen names Fed associate director as pick for acting OCC chief: Yellen has announced her intention to appoint Michael Hsu as First Deputy Comptroller of the Office of the Comptroller of the Currency (OCC).
NY bill proposes moratorium on crypto mines and mandates environmental impact assessments: A new bill on the floor of the New York State Senate aims to prohibit crypto mining centers from operating until the state can assess their environmental impact.
IRS will seize your crypto if you can’t pay back taxes: If you’re a cryptocurrency holder with past-due tax debts, your provable holdings may be confiscated by the IRS if you don’t pay back what you owe.
SEC enforcement actions cost crypto firms and individuals $1.7B in penalties: Of the 75 enforcement actions on crypto brought by the commission from 2013 to 2020, the majority involved allegations of fraud or unregistered securities offerings.
What do the Fed’s draft standards for vetting ‘novel institutions’ mean for crypto banks? Earlier this month, the U.S. Federal Reserve put out proposed new standards for appraising “novel institutions” looking to access the Fed’s payments and accounts services.
Standard Custody takes new route to ‘qualified custodian’ status: It’s the first digital asset firm to receive approval on a de novo application for a New York trust license.
Crypto exchange Binance faces investigation by IRS, Department of Justice: Cryptocurrency exchange Binance is reportedly facing an investigation by the U.S. Internal Revenue Service as well as the Department of Justice, according to a report by Bloomberg.
Court orders Kraken to provide information on user transactions to the IRS: A court in northern California has ordered Kraken to provide information on users who traded more than $20,000 between 2016 and 2020 to the IRS.
New York Attorney General sues to halt the operations of crypto app company Coinseed: On May 6, New York Attorney General (NYAG) Letitia James requested a temporary restraining order and other legal action against crypto app company Coinseed.
XRP Holders’ Petition To End SEC Lawsuit Meets Required Number of Signatures: XRP holders are petitioning the U.S. Securities and Exchange Commission (SEC) head Gary Gensler to terminate the lawsuit against digital payments giant Ripple. Crypto and Policy founder Thomas Hodge has successfully obtained 30,000 signatures on a petition requesting that the SEC drop its lawsuit against Ripple in which the regulatory agency accuses the firm of selling unauthorized securities in the form of XRP.
U.S. Office of Foreign Assets Control is seeking blockchain analytics tools: Public records indicate that the U.S. Office of Foreign Assets Control, which is part of the Treasury Department, is on the hunt for at least one blockchain analytics tool.
Trial of former BitMEX executives set for next March: 18 months after charges were filed, BitMEX executives will head to trial.
Grayscale’s diversified crypto fund files to become SEC reporting company: Grayscale Investments has filed to make its $630-million diversified large-cap crypto fund an SEC reporting company.
Here’s how Coinbase, Kraken and others have been deciding which cryptos are securities: The industry group aims to develop an objective standard for determining which assets are securities. But ultimately it’s up to the SEC.
Europe
UK will likely need to issue a digital currency, says BoE deputy governor: The Bank of England’s deputy governor has argued that, with the possible rise of non-bank actors issuing currency, public money in digital form could serve as a crucial anchor for confidence in money as a social convention.
Diginex’s crypto custody arm receives green light from UK financial watchdog: The firm said clearing the regulatory hurdle had the potential to drive more institutional investors towards crypto custody solutions.
Asia
Bank of Korea wants to monitor crypto trading activity, cites monetary risks: South Korea’s central bank is the latest entity seeking powers to monitor crypto trading activity in the country.
South Korean Bitcoin miners can deduct electricity costs from crypto tax filings: Crypto miners will be able to deduct electricity costs as business expenses when filing cryptocurrency taxes starting in 2022.
South Koreans flock to crypto amid a heavy-handed regulation approach: With crypto demand skyrocketing in South Korea, the government is looking to regulate digital assets, and the local market is feeling the pressure.
Rest of the World
Argentina’s tax body reportedly asks crypto firms to report all activity: Argentina’s tax authority AFIP reportedly ordered domestic crypto exchanges and payment firms to provide monthly reports of all kinds of operations.
Iran seems to be attempting to ban foreign-mined cryptocurrencies for payments: A difficult-to-enforce ban may actually be part of a larger sanctions-avoidance strategy.
Turkish government to track crypto transactions over $1,200: Turkey’s Minister of Treasury and Finance sheds light on regulatory actions following an alleged $150-million crypto exchange scam.
Indonesia considers capital gains tax on cryptocurrency trades: A new capital gains tax scheme on crypto trades is still being discussed, according to a tax official.
Indian startup organization proposes regulatory framework for crypto: An internet startup association in India has asked the government to define cryptocurrencies like Bitcoin as digital assets and not currencies.
Kazakhstan’s government to create roadmap for developing crypto market: Kazakhstani authorities plan to improve their regulatory approach in order to strengthen the country’s position in the global crypto market.
MISC
- Crypto.com becomes first cryptocurrency platform to receive MFSA Class 3 license: Under the Class 3 VFA license, Crypto.com can provide custodial services and execute orders on behalf of other persons.
- Stablecoins present new dilemmas for regulators as mass adoption looms: A close look at the policy issues relating to the potential impact of stablecoins on financial systems and economies around the world.
- The regulators are coming for crypto: What investors need to know: Increasingly sophisticated and constructive regulation of digital assets promotes innovation and helps economies to flourish.
- FATF draft guidance targets DeFi with compliance: The final guidance expected to be issued by the FATF this summer might determine the next chapter for the decentralized finance space.
- Blockchain will thrive once innovators and regulators work together: Emerging technology such as blockchain can change the world for the better, but regulation and innovation must work in tandem.
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