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On July 31, a US district judge allowed the United States Securities and Exchange Commission (SEC) to proceed with its case against Terraform Labs Pte and founder Do Kwon after denying Terraform Labs’ request to dismiss the lawsuit.
Explaining his reasoning, the judge rejected the distinction made in Ripple’s July 13 decision that whether coins are securities “is based on how they are sold, so that coins sold directly to institutional investors are considered securities, and those sold through transactions on the secondary market, small investors are not”.
The judge also said that the SEC’s charges against Terraform and Do Kwon apply to both institutional and retail investors, as they touted the token’s profitability and claimed that proceeds from the sale would be put into the Terraform blockchain for further profit.
This decision does not overturn the Ripple case. However, it suggests that the question of whether a cryptoasset is a security remains unresolved and could fuel the case for legislative action by Congress to determine the legal status of cryptoassets, rather than relying on court rulings.
A group of Japanese crypto industry groups are lobbying for an overhaul of the taxation regime
In late July, the Japan Blockchain Association (JBA) submitted a formal request to the Japanese government to consider three steps to revise the national cryptocurrency tax regime, which significantly affects web3 business and crypto asset ownership in the country.
First, the JBA seeks to eliminate year-end unrealized capital gains tax for corporations holding cryptoassets. Second, it proposes to change the method of taxation of profits from trading in personal digital assets from the current comprehensive taxation to separate self-assessment taxation at a single tax rate of 20%. Finally, it advocates abolishing income tax on the profits made every time an individual exchanges a crypto-asset.
South Korea Launches Cross-Agency Crypto Crime Investigation Unit
South Korea has launched a government investigative unit to tackle a rise in crypto-related crime, exacerbated by a lack of formal investor protections. The Joint Investigative Center for Cryptocrimes will be staffed by officials from judicial, financial, tax and customs agencies.
The prosecution stated that “virtual assets are investment products that are already compared to shares, but market participants are practically left out of legal protection amid incomplete laws and systems.”
The new center is said to help address this gap until the cryptoasset market is regulated with investigations targeting high-volatility cryptoassets or delisting and problematic activities – such as illegal trading practices, tax evasion and money laundering.
UK and Singapore to collaborate in fintech development
In a recent joint dialogue, the UK and Singapore agreed to partner in developing global regulatory standards for cryptoassets as part of international standard-setting bodies such as the International Organization of Securities Commissions (IOSCO) and the Financial Stability Board (FSB).
Both countries shared their regulatory approaches to cryptoassets and recent developments, including a consultation on the UK’s future financial services regulatory regime for cryptoassets, regulatory rules for the marketing of cryptoassets, stablecoins and consumer protection measures.
They also discussed their approaches to central bank digital currencies (CBDCs) and agreed to continue cooperation on cryptoasset regulation and other priority areas such as sustainable financing and cross-border trade arrangements.
Compliance with the law in America
