Crypto Regulation News: IRS clarifies reporting requirements for crypto bought with fiat, Kentucky bill to provide tax breaks for local crypto miners, Biden’s SEC chair nominee says Bitcoin and crypto are transformative technologies, The United Arab Emirates chase crypto and blockchain adoption, Thailand’s crypto market seeks clearer regulations, and more!

Paradigm

Published in

Paradigm

10 min readMar 8, 2021

Vol. 63, 22nd February — 8th March

TL;DR

Congress seeks answers on crypto anonymity in hearing on domestic terrorist financing.
Blockchain Association meeting with key Biden staff about regulations.
A new clarification from the IRS indicates that buying and holding cryptocurrency does not need to be reported on the 1040 form.
FATF says it will release updated guidance for digital assets in June.
BitGo becomes latest crypto firm to earn trust license from New York regulator.
U.S. prosecutors discussing surrender agreement with former BitMEX CEO Arthur Hayes.
Ripple’s Garlinghouse, Larsen to file motions to dismiss in SEC lawsuit.
Gary Gensler, the former CFTC chairman nominated to be President Joe Biden to lead the SEC, said that cryptocurrencies “have been a catalyst for change.”
DeFi will provide good regulatory test for SEC, says Commissioner Peirce.
‘Play by the rules or we will shut you down,’ says NY AG to crypto industry.
Fed chair says it’s up to Congress to bring a digital dollar to market.
Kentucky legislators move ahead with proposed tax breaks for crypto miners.
6M noobs have bought coins on Robinhood Crypto already in 2021.
Coinbase’s S-1 registration statement filing has revealed details of a number of regulatory investigations involving the exchange in recent years.
Crypto project backed by billionaire Tim Draper shutting down amid scrutiny from SEC.
Co-founder of Floyd Mayweather-promoted ICO sentenced to 8 years.
FCA releases detailed 5-point plan to make UK a fintech powerhouse.
An HM Treasury-ordered review of UK fintech has called for the introduction of a new UK regime for the regulation of crypto-assets.
The Block Research analyzes the current regulatory frameworks for cryptocurrency businesses and taxation relating to cryptocurrencies in Switzerland.
Turkish finance ministry to study cryptocurrency with local regulators.
No crypto ban in India: Finance Minister predicts “very calibrated” stance.
China’s Inner Mongolia to shut down crypto mining farms by April.
The Thai SEC says the total number of crypto accounts rose by nearly 300% over the course of the last 180 days.
Vietnam’s finance ministry warns about crypto trading risks.
Belarusian government explores potential move into crypto mining.
Blockchain and crypto will challenge current finance, Nigeria VP says.
Elon Musk unfazed by rumored possibility of SEC probe into Dogecoin tweets.
And more!

Opinions

DeFi will provide good regulatory test for SEC, says Commissioner Peirce: The SEC commissioner described the DeFi space as “a work in process” but overall “alluring.

Fed chair says it’s up to Congress to bring a digital dollar to market: Jerome Powell added that the Federal Reserve needs to consider the health of other markets when creating a digital currency.

Gensler tells Congress that cryptocurrencies ‘have been a catalyst for change’: Gary Gensler, the former CFTC chairman nominated to be President Joe Biden to lead the Securities and Exchange Commission (SEC), said last Tuesday that cryptocurrencies “have been a catalyst for change.”

John McAfee decries SEC crypto promotion allegations as ‘overblown’: John McAfee called the U.S. government’s allegations against him “overblown” in a statement published Saturday.

China’s Digital Yuan Will Be One of the Biggest Risks in Crypto, Says Market Maker Phillip Gillespie — Here’s Why: Market maker Phillip Gillespie warns that China’s push to launch the digital yuan may not bode well for the future of Bitcoin and other cryptocurrencies. The chief executive of crypto market maker and liquidity provider B2C2 Japan tells Bloomberg that once China releases a central bank digital currency (CBDC), the country may also clamp down on the cryptocurrency space.

“Once a digital yuan is introduced, that’s going to be one of the biggest risks in crypto.”

Kevin O’Leary Flips on Bitcoin, Says He’s Buying BTC After Crypto ‘Game Changer’: Investor and TV personality Kevin O’Leary is revealing that he has warmed up to Bitcoin and now holds 3% of his portfolio in BTC and ETH, the two largest crypto assets by market cap. In a CNBC interview, the Shark Tank panelist discloses that he has grown “fascinated” by cryptocurrencies.

Cathie Wood Says Janet Yellen Doesn’t Understand Cryptocurrency, Bitcoin Far More Energy Efficient Than Gold: Hedge fund heavyweight Cathie Wood of ARK Invest says U.S. Treasury Secretary Janet Yellen doesn’t understand cryptocurrencies and Bitcoin. In a new video, Wood addresses Janet Yellen’s recent assertion that Bitcoin is “extremely” energy inefficient and a hub for illicit transactions.

Bitcoin needs clear regulations to be less volatile, Bridgewater analyst says: Bitcoin will become more stable and liquid when regulatory certainty is in place, Bridgewater’s director of investment research argued.

Professional traders need a global crypto sea, not hundreds of lakes: The cryptocurrency trading market is in its early stages, with regulations playing a key role in market fragmentation.

What DeFi needs to do next to keep institutional players interested: In order for DeFi to have access to institutional actors, it will need to adapt. But by adapting, it might lose some of its core tenets.

Crypto can be lucrative, but make sure you’re ready for the taxman: Investing in digital assets can offer a plethora of opportunities, but when the taxman comes, investors best be prepared.

USA

Congress seeks answers on crypto anonymity in hearing on domestic terrorist financing: Much of the hearing’s content centered on the use of cryptocurrencies, creating space for experts to explain the nuance of crypto’s anonymity.

Blockchain Association meeting with key Biden staff about regulations: The crypto advocacy group is going on a charm offensive and meeting with top representatives of the Biden administration.

IRS clarifies that buying and holding crypto doesn’t require 1040 reporting: A new clarification from the IRS indicates that buying and holding cryptocurrency does not need to be reported on the 1040 form.

FATF says it will release updated guidance for digital assets in June: A post-meeting statement from the international regulatory body recapped plans for the coming year, including its dealings with digital asset standards.

SEC’s Division of Examinations issues Risk Alert on digital assets: The Risk Alert seemed to take particular aim at broker-dealers, who have been “inadequate” in their AML compliance.

BitGo becomes latest crypto firm to earn trust license from New York regulator: The NYDFS issued the crypto custodian its New York Trust license, according to an announcement from the company.

U.S. prosecutors discussing surrender agreement with former BitMEX CEO Arthur Hayes: Arthur Hayes could surrender to U.S. authorities as soon as next month, prosecutors told a New York judge during a February hearing.

Ripple’s Garlinghouse, Larsen to file motions to dismiss in SEC lawsuit: Twin letters filed in federal court indicate that Ripple CEO Brad Garlinghouse and co-founder Chris Larsen will seek a dismissal of the Securities and Exchange Commission’s ongoing lawsuit.

Ripple Says SEC Lawsuit Has Cost XRP Investors $15,000,000,000 in Damages: Digital payments giant Ripple Labs asserts that the U.S. Securities and Exchange Commission’s actions against the firm have cost investors billions of dollars in damages. In response to the SEC’s amended complaint, Ripple alleges that the lawsuit accusing the firm of selling unregistered securities in the form of XRP has drastically harmed those that the governing agency seeks to protect.

New York AG warns that if crypto firms don’t ‘play by the rules’ they will get shut down: Attorney General Letitia James also warned New York investors that the cryptocurrency market carries ‘extreme risks’

Kentucky legislators move ahead with proposed tax breaks for crypto miners: A proposal to extend tax breaks to cryptocurrency miners who make a home in the U.S. state of Kentucky has advanced in spite of a potential drain on the government’s coffers.

Ex-Chairman Tarbert, who dubbed Ether a commodity, left the CFTC

Co-founder of Floyd Mayweather-promoted ICO sentenced to 8 years: A co-founder of the fraudulent 2017 ICO Centra Tech has been sentenced to eight years in prison for his role in the scheme.

Crypto Project Backed by Billionaire Tim Draper Shutting Down Amid Scrutiny From SEC: A US-based crypto project backed by billionaire venture capitalist Tim Draper is ceasing operations less than a year after its token launch. DeFi Money Market DAO (DMM), which allowed users to earn 6.5% APY on specific staked assets, has announced a sudden and permanent shutdown.

Europe

FCA releases detailed 5-point plan to make UK a fintech powerhouse: A 108-page report details how the United Kingdom can retain its status as one of the global centers for fintech innovation and business.

HM Treasury’s UK fintech review calls for new crypto-assets regime: An HM Treasury-ordered review of UK fintech has called for the introduction of a new UK regime for the regulation of crypto-assets.

Cryptocurrency exchange Bybit shuts up shop in UK in compliance with FCA ban: Bybit will stop serving customers from U.K.-based IP addresses starting March 31, following the FCA’s ban on all cryptocurrency derivatives trading.

A comprehensive regulatory overview of Switzerland: The Block Research analyzes the current regulatory frameworks for cryptocurrency businesses and taxation relating to cryptocurrencies in Switzerland.

Asia

China’s Inner Mongolia to shut down crypto mining farms by April: Inner Mongolia drew the ire of Beijing after failing to meet energy efficiency goals.

China’s CBDC is about domestic dominance, not beating the dollar: The notion of China racing to launch a CBDC that will end U.S. monetary supremacy doesn’t hold up if you look at the facts on the ground.

Thailand’s crypto market seeks clearer regulations as industry interest peaks: The Thai SEC says the total number of crypto accounts rose by nearly 300% over the course of the last 180 days.

Thai SEC forced to clarify proposed crypto rules after public backlash: Financial regulators in Thailand may adjust the minimum annual income qualification for crypto investors amid public outrage.

Vietnam’s finance ministry warns about crypto trading risks: Vietnam’s Ministry of Finance reminded the public that cryptocurrencies have no legal framework in the country.

Huobi secures crypto asset management license in Hong Kong: A Huobi subsidiary has been given the green light to operate a crypto investment fund by regulators in Hong Kong.

Rest of the World

Canada’s CI Financial files for new Bitcoin ETF with Galaxy as subadvisor: Canadian investment firm CI Financial, with Mike Novogratz’s Galaxy as subadvisor, has filed for a new bitcoin exchange-traded fund (ETF).

Bitcoin ETF may come to US, but not all crypto investors think it’s needed: As Bitcoin ETFs launch in Canada, an approval from U.S. authorities appears to be closer than ever before as naysayers start to run out of reasons to deny it.

Blockchain Australia ousts retail merchant crypto project Qoin: Blockchain Australia has terminated Qoin’s membership of the association amid allegations that the crypto project is a pyramid scheme.

Belarusian government explores potential move into crypto mining: The Ministry of Energy of the Republic of Belarus has launched an investigation into the potential pros and cons of crypto mining.

What Russian journalists can learn from Navalny’s Bitcoin wallet: As the Kremlin sequesters funds to the opposition, Bitcoin serves to run blockades.

Turkish finance ministry to study cryptocurrency with local regulators: Regulators are taking a hard look at crypto in Turkey, but local experts welcome the oversight.

Central bank digital currency a mixed blessing, says RBI: The Reserve Bank of India has described central bank digital currencies as a mixed bag in its report on currency and finance for 2020 to 2021.

No crypto ban in India: Finance Minister predicts “very calibrated” stance: No blanket ban on the horizon, with an open “window” for experimentation in India, says Nirmala Sitharaman.

India’s largest crypto exchange adopts decentralized Unstoppable Domains: India’s largest cryptocurrency exchange will use Unstoppable Domains to create and host blockchain-based URLs, despite the nation’s impending Bitcoin ban.

The United Arab Emirates’ green digitization vision: The COVID-19 pandemic has revealed the need for sustainable digitization of the economy, and the UAE is accepting the challenge.

Blockchain and crypto will challenge current finance, Nigeria VP says: Yemi Osinbajo sees potential for crypto and blockchain.

MISC

6M noobs have bought coins on Robinhood Crypto already in 2021: Retail users have flocked to cryptocurrencies in 2021, with Robinhood reporting an increase in new monthly crypto traders of 15 times last year’s average.

Coinbase S-1 reveals details of CFTC investigation into 2017 ETH ‘flash crash’: Crypto giant Coinbase’s S-1 registration statement filing has revealed details of a number of regulatory investigations involving the exchange in recent years.

Many pieces of the Diem puzzle still missing as launch gets delayed: Besides securing approval from Swiss regulators, Diem seems likely to face opposition from government regulators in many countries.

Elon Musk unfazed by rumored possibility of SEC probe into Dogecoin tweets: The Tesla CEO avowedly loves “dogs and memes” and is greeting the alleged possibility of federal scrutiny of his Dogecoin tweets with a consistently droll attitude.