IRS Proposal to Classify Certain Crypto Entities as Brokers for Tax Reporting Receives Over 117,000 Comments
The IRS has received over 117,000 comments regarding the proposal to classify certain crypto entities as brokers for tax reporting purposes, with concerns raised about privacy implications, reporting requirements on stablecoin transactions, and the burden on brokers. The amount of information that would need to be collected and reported is a central concern. Some commenters suggested exempting small cryptocurrency transactions from tax reporting requirements, but this was not addressed in the proposed rule. Meanwhile, the UK has announced new stablecoin rules and a hearing will take place in the Genesis bankruptcy case. The Senate Banking Committee will hold a classified briefing on illicit finance.
UK Regulators Release Suite of Documents on Stablecoin Regulation
The Financial Conduct Authority (FCA) and the Bank of England (BOE) have released a suite of documents concerning stablecoin regulation in the UK. The FCA's discussion paper explores potential retail and wholesale stablecoin use cases, proposing the use of existing client assets regime as the basis of rules on redemption and custodianship. The BOE's Prudential Regulatory Authority (PRA) has released a letter advising deposit-taking institutions to maintain a clear difference between e-money or regulated stablecoins and other types of deposit. The BOE roadmap includes a timeline for implementation of stablecoin regulation by 2025.
U.S. Republican lawmakers want SEC to develop regulatory framework for cryptocurrencies
Republican Congressman and SEC Commissioner Mark Uyeda stated that the SEC needs to consider proposing rules or guidance to regulate cryptocurrencies, rather than taking a more enforcement-focused approach.
The Republican member stated that the SEC could have taken measures to assist in the development of laws regarding cryptocurrencies, but did not do so. "Unfortunately, the SEC did not take this approach, but instead took a case-by-case approach through enforcement actions. Therefore, it will take many years to establish any legally binding precedents, as matters need to go through a series of procedures before reaching the level of the appellate court for trial."
U.S. Treasury Secretary Yellen: More non-bank financial institutions will be listed as targets of strict supervision
US Treasury Secretary Yellen stated on Friday that after months of discussion, senior officials voted on a new framework for defining systemically important financial institutions. Being labeled "too big to fail" carries significant compliance costs and regulatory challenges, and since it was introduced over a decade ago, this label has mainly been applied to large Wall Street banks.
Yellen did not name which institutions would be subject to stricter regulation. However, this new process could result in some non-bank financial companies being subject to stricter regulation.
Yellen stated that "strong procedural protections will be provided for companies undergoing evaluation, including important committee involvement and communication, and opportunities to hear these companies' opinions." She also stated that the highest regulatory body will vote to issue a new "financial stability risk analysis framework" to better explain how it assesses and addresses potential risks.
SEC Requests Documents Related to PayPal's Stablecoin Amid Regulatory Actions
PayPal has confirmed that the SEC has requested documents related to its PYUSD stablecoin, which is co-managed by Paxos. This move marks the latest regulatory action taken by the SEC against the crypto industry, following its lawsuit against the Binance-brand BUSD stablecoin. The PYUSD stablecoin was launched by PayPal during the "crypto winter" and is used for on- and off-platform transactions. Some observers have criticized the SEC for "picking winners" in the crypto industry, as the Howey Test's vagueness could potentially classify anything that leads to profit as a securities offering.
FCA releases supplementary guidance on UK crypto asset promotion rules
On October 8th, the promotion of encrypted assets rules that took effect in the UK caused some confusion. The Financial Conduct Authority (FCA) responded by providing additional guidance for cryptocurrency companies to help them comply with the regulations. FCA Consumer Investment Director Lucy Castledine stated in a statement, "Although the new rules for the cryptocurrency industry are consistent with existing rules for other high-risk investments, we have worked extensively with the industry and designed this guide specifically to support cryptocurrency companies in complying with the rules." <br>
Abu Dhabi Unveils Regulatory Framework for Decentralized Autonomous Organizations (DAOs) and Distributed Ledger Technology (DLT)
Abu Dhabi, the second-most populous emirate in the UAE, has introduced a regulatory framework for decentralized autonomous organizations (DAOs) and other entities built on distributed ledger technology (DLT). This marks the first step towards such a framework by a Middle Eastern territory. The new framework allows DAOs to operate legally and issue tokens to their members, providing regulatory clarity for firms in the digital assets sector. Abu Dhabi is aiming to become a crypto hub alongside Dubai, and this move is part of a larger initiative to foster initiatives in the broader blockchain and digital asset realm.
PayPal Obtains Registration as Official Crypto Service Provider from UK's FCA
PayPal UK Limited has been granted registration as a crypto service provider by the UK's Financial Conduct Authority (FCA), allowing the company to offer a range of cryptocurrency services to the UK market. The registration process requires companies to adhere to strict anti-money laundering protocols, demonstrating PayPal's commitment to regulatory standards. This move strengthens PayPal's position as a global leader in digital payments and provides British users with a trusted name in the volatile cryptocurrency market. The FCA's decision also suggests a promising future for other potential entrants in the market.
Hong Kong’s local OTC One Satoshi announced that it will form the “Hong Kong Virtual Asset Industry Association”
A local OTC Bitcoin (One Satoshi) in Hong Kong announced the formation of the "Hong Kong Virtual Asset Industry Association" to assist the industry in formulating multiple anti-money laundering (AML) and know-your-customer (KYC) guidelines, to unify and enhance industry standards and reputation, maintain the common interests of the industry, and hope to gather industry strength and experience to provide accurate anti-fraud suggestions to the government to enhance public security and create a good business environment, and avoid Hong Kong becoming the capital of fraud or money laundering paradise. <br>
UK Regulator Warns Against Crypto Exchange Bitfinex
The UK's Financial Conduct Authority (FCA) has issued a warning against Bitfinex, a popular cryptocurrency exchange platform. The FCA stated that Bitfinex may be promoting financial services without the necessary authorization or approval. Bitfinex responded by stating that it has taken measures to meet the FCA's requirements and is disappointed by the warning. The FCA's primary objective is to ensure that financial markets are fair and transparent and operate in a way that benefits consumers.
