SEC Adopts New Rules to Extend Oversight to Crypto and DeFi, Sparking Debate in Industry
The SEC has voted to adopt new rules that extend federal securities laws to cover the cryptocurrency and DeFi sectors, with an exemption for those with assets less than $50 million. The rules require individuals and entities engaged in transactions involving crypto assets that meet the definition of securities or government securities to comply with federal securities laws, and target market participants who engage in trading activities as part of a regular business. The adoption of these rules is part of a broader regulatory push to bring greater clarity and oversight to the cryptocurrency industry, but has sparked debate within the crypto community regarding the inclusion of DeFi. Despite industry objections, the SEC proceeded with the adoption of the rules, with Chairman Gary Gensler noting that they are "common sense" measures to protect investors and promote market integrity.
Japan’s Financial Services Agency relaxes regulations on employee rights of tokenized LLCs
According to Coinpost reports, the Japanese Financial Services Agency has announced a revision to the definition of the second article of the Financial Instruments and Exchange Act, which aims to give limited liability company-type DAO members the same rights as regular LLC members in terms of token ownership. This measure is expected to ease regulations on the rights of tokenized LLC employees and simplify DAO operations.
The European Securities and Markets Authority proposes that non-EU headquartered encryption companies can only provide services to EU customers under limited conditions
The European Securities and Markets Authority (ESMA) proposed on Monday that cryptocurrency companies based outside the European Union will only be able to provide services directly to customers within the EU under very limited conditions to avoid unfair competition, as reported by Reuters.
Chen Haolian: The Hong Kong government will ensure that the regulatory system reduces the actual and potential risks of virtual assets
Hong Kong's Deputy Director of Financial and Treasury Bureau, Chen Ho-lim, stated in his speech at the Asian Financial Forum that the authorities are actively involved in promoting the development of virtual assets and third-generation internet ecosystems. They plan to amend regulations to include over-the-counter trading of virtual assets in the scope of regulation. Chen Ho-lim pointed out that the government will ensure that the regulatory system manages and reduces the actual and potential risks of virtual assets, while providing a transparent and predictable regulatory environment for industry development. Web3 is a rapidly developing field based on blockchain technology, and Hong Kong has always emphasized the resilience of its financial markets, including virtual assets. He said that more than 20 economies and over 170 companies related to third-generation internet have set up entities in Hong Kong. The virtual asset trading platform operator licensing system was implemented in June last year, and two virtual asset trading platform operators have been licensed. The Securities and Futures Commission is also reviewing applications submitted by more than 10 platform operators. The proposed stablecoin regulatory system was published for public consultation in December last year, and the Monetary Authority will launch a sandbox arrangement to promote exchanges of opinions between regulatory authorities and the industry.
Hong Kong Securities and Futures Commission: Will provide regulatory guidance on new virtual asset activities and promote the development of the regulatory system
Hong Kong Securities and Futures Commission released its "Strategic Focus for 2024 to 2026". In the area of virtual assets, the Hong Kong Securities and Futures Commission will provide regulatory guidance on new virtual asset activities and promote the development of regulatory systems for virtual asset trading platforms. While supporting the tokenization of traditional products, it will also utilize blockchain and Web3 technologies to safeguard the interests of investors, promote the establishment of a responsible and secure fintech ecosystem, and establish closer ties with local and international law enforcement agencies to combat crime.
South Korean Government Considers Eliminating Cryptocurrency Taxes in New Income Tax System
On January 18th, Jeong Jung-hoon, Deputy Minister of the Tax and Customs Office of the Ministry of Economy and Finance of South Korea, responded to public inquiries about whether cryptocurrency taxes should be abolished along with financial investment taxes. He stated that the National Assembly, the country's legislative body, should discuss whether to include cryptocurrency gains as part of the plan to abolish financial investment income taxes. The South Korean government plans to submit a revised income tax law regarding financial investment taxes by the end of January or early February. The national elections of the National Assembly are scheduled for April 10th.
EU banking watchdog issues guidance for crypto firms to comply with anti-money laundering requirements
The European Banking Authority (EBA) has issued guidance for crypto firms to comply with anti-money laundering and terrorist-financing requirements. The EBA aims to harmonize the approach that crypto asset service providers (CASP) across the EU should adopt to combat financial crime. The EBA has published guidelines on risk-based supervision of CASPs and is consulting on proposed guidelines to prevent the abuse of crypto transfers. The guidelines will apply from Dec. 30, around the time when the Markets in Crypto Assets (MiCA) regulatory package takes full effect. Competent authorities have two months to report whether they comply with the new guidelines.
Coinbase sends letter to U.S. Consumer Financial Protection Bureau: Cryptoassets should not be included in proposed regulatory rules for payment apps
Paul Grewal, Chief Legal Officer of Coinbase, sent a letter to the US Consumer Financial Protection Bureau (CFPB) on Monday commenting on the CFPB's proposal to define and regulate general digital consumer payment applications. Coinbase stated that its main concern is that the proposed CFPB rules would include cryptocurrencies within its jurisdiction without conducting extensive research or understanding of cryptocurrency transactions, and without proving the authenticity of cryptocurrencies. The fundamental issue prohibits the agency from exercising jurisdiction over the digital asset industry without clear authorization from the US Congress. Federal agencies, including the CFPB, should not overstep their authority before Congress and should amend the rules to exclude cryptocurrencies and allow Congress to fulfill its duty to establish a clear regulatory framework to protect consumers.
Bitfinex: According to regulatory requirements, it will stop providing products and services to some customers in the UK
Bitfinex announced in an official statement that it will stop providing products and services to certain customers in the UK in accordance with regulatory requirements. Bitfinex had previously informed that UK residents who create personal account verification on the Bitfinex platform on or after November 1, 2023, will no longer be eligible. In the future, Bitfinex will no longer accept verification applications from UK corporate residents, except for applications that meet the definition of applicable exemptions for high net worth companies, unincorporated associations or trusts, or other related exemptions.
Crypto news & regulatory update: December 4 – 22, 2023
The a16z crypto Regulatory Update is a series that highlights the latest crypto regulation and policy happenings relevant to builders in web3 and crypto, as tracked and curated by the a16z crypto regulatory team. The roundups are based on recent news, the latest updates, new guidance, ongoing legislation, and frameworks released by regulatory agencies/bodies, industry consortia and professional associations, banks, governments, and other entities as they impact the crypto industry (or applications) around the world. We also occasionally include select other resources such as talks, posts, or other commentary – from us or from others – with the updates.
