US regulators continue to discuss crypto: Law Decoded, Nov. 13–20
The United States House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion received an education in the uses of blockchain technology in a hearing titled “Crypto Crime in Context: Breaking Down the Illicit Activity in Digital Assets.” The meeting began with a discussion of Hamas’s use of crypto for fundraising. However, the committee’s Chair, Representative French Hill, declared that as “phone and the internet aren’t to be blamed for terror financing,” crypto shouldn’t be either. The witnesses, including representatives from Consensys and Chainalysis, spoke about the need for international and public-private collaboration in stopping the misuse of digital assets, the need for well-crafted legislation and the intricacies of blockchain sleuthing.
At another hearing held by the Senate Special Committee on Aging, U.S. Senator Elizabeth Warren highlighted the dangers of cryptocurrency scams. Steve Weisman, a recognized expert on scams and cybersecurity as described by Warren, confirmed that unlike credit card fraud, which can be swiftly identified, stopped and traced, crypto poses greater challenges with transparency. Weisman expressed support for Warren’s Digital Asset Anti-Money Laundering Act, which seeks to ensure that digital assets are subject to the same Anti-Money Laundering laws as traditional fiat currency.
Meanwhile, the New York State Department of Financial Services (NYDFS) unveiled new restrictions that mandate crypto companies submit their coin listing and delisting policies for NYDFS approval. Company policies will be measured against more stringent risk assessment standards set forth by the NYDFS to protect investors. Technological, operational, cybersecurity, market, liquidity and illicit activity risks of the tokens are among the factors to be considered by the NYDFS. The incoming changes apply to all digital currency business entities licensed under the New York Codes, Rules and Regulation or limited purpose trust companies under the state’s banking law.
Vivek Ramaswamy criticizes mixer sanctions in his crypto program
Republican United States Presidential candidate Vivek Ramaswamy unveiled a crypto policy framework called “The Three Freedoms of Crypto.” Ramaswamy vows to “direct government prosecutors to prosecute bad actors, not the code they use and not the developers who write that code” if elected president. In an accompanying speech, Ramaswamy specifically targeted sanctions against crypto mixer Tornado Cash, stating: “The case brought against the Tornado Cash folks, for example. […] You can’t go after the developers of code.”
The presidential candidate also promises to provide regulatory clarity that gives new cryptocurrencies “safe harbor” exemptions from securities laws for a period of time after they are launched and to prevent any federal agency from creating rules that limit the use of self-hosted wallets.
Australia will impose a capital gains tax on wrapped tokens
The Australian Taxation Office (ATO) has issued guidance on capital gains tax (CGT) treatment of decentralized finance and wrapping crypto tokens for individuals, clarifying its intent to continue taxing Australians on capital gains when wrapping and unwrapping tokens. In May 2022, the ATO outlined crypto capital gains as one of four key focus areas. Building on the initiative, the Australian tax authority recently clarified a raft of taxable actions in its jurisdiction. The transfer of crypto assets to an address that the sender does not control or that already holds a balance will be regarded as a taxable CGT event, the ATO said in its statement.
Democratic Party of South Korea obliges its candidates to disclose crypto holdings
The Democratic Party of Korea, which holds 167 out of 300 seats in the National Assembly, has made it mandatory for prospective candidates to disclose their digital asset holdings before the 2024 general election. The disclosure will be a part of the party’s effort to show the “high moral standards” of its candidates. In the case of false reports, the party will cancel that person’s candidature. However, there would be no consequences for holding crypto. The information on prospective candidates will be made available to the public on a separate online platform featuring details of their careers, educational background and legislative activity plans.