red 
🇺🇸 Cryptoasset reporting requirements of the US Infrastructure Act are considered overreach
President Joe Biden signed on November 15, 2021 bipartisan infrastructure bill. The bill includes new tax reporting requirements for cryptoasset brokers. Observers are concerned with the open language definition of “broker” used in the bill, which could be interpreted to include any blockchain network participant. Indeed, the Internal Revenue Code’s definition of “broker” has been amended to include: “any person who is responsible (for a fee) for the regular provision of any service that carries out the transfer of digital assets on behalf of another person”.
In infrastructure law, any person or entity that falls within the definition above will have to meet the following reporting requirements: “[A]ny broker, in connection with any transfer (not being part of a sale or exchange by such broker) during a calendar year of a covered security that is a digital asset from an account maintained by such broker to an account not maintained by, or an address other than associated with a person whom such broker knows or has reason to know is also a broker, shall make a return for such calendar year, in a form prescribed by the Secretary, setting forth the information otherwise required to be furnished with respect to transfers subject to subsection (a). ”
Participants from the industry were react quickly accusing the government of exceeding regulations. Charles Hoskinson, founder of Cardano, reacted to the bill stating that: “Today, we are in a slightly worse position, because the Draft Law on Infrastructure was adopted. If left to its own devices, by 2023 when these mandates go into effect…depending on how they are interpreted and what the IRS does with it, it could cause catastrophic damage.”
House representatives, including Patrick McHenry of the House Financial Services Committee, introduced bipartisan legislation called the Sustaining Innovation in America Act to clarify “broker” reporting requirements following changes to the Internal Revenue Code. The proposed law would amend the amendment to the definition of “broker” quoted above to: “any person who is willing (for a fee) in the ordinary course of trade or business to sell digital assets on the instructions of their customers.” ”
The reporting requirements cited above are also amended to include the following sentence at the end of the paragraph: “Information that brokers report under this section shall be limited to customer information that the customer voluntarily provides and that the broker holds for legitimate business purposes.”
Changes to the “Keeping America Innovating Act” ensure that reporting requirements are limited to crypto-asset companies, not individuals that interact with the blockchain to confirm transactions. The bill proposes to move the effective date of some of these new requirements to 2026.
🇮🇳 India continues to explore regulation of cryptoassets
Details have appeared regarding the cryptoasset regulation bill that should be presented to the Indian Parliament this winter. The bill will reportedly ban payments using cryptoassets, but allow users to trade their assets. Authorities are expected to ban active solicitation, such as advertisements, in the crypto-asset business. These reports are followed by India’s Standing Committee on Finance inaugural hearing with industry stakeholders on “Cryptofinance: Opportunities and Challenges” on November 15, 2021. These developments illustrate the government’s willingness to move quickly to regulate cryptoassets as Elliptical covered announcements from the Ministry of Finance earlier this month.
To learn more about how your business can use Elliptic’s tools to comply with AML/CFT requirements in anticipation of new requirements in India, schedule a demo.
🇮🇱 Israel adopts new AML laws for cryptoassets
Israeli government new anti-money laundering (AML) order. for crypto-asset business entered into force on November 14, 2021. The updated regulation includes requirements for crypto-asset business licensing. According to The Jerusalem PostDirector of the Anti-Terrorist Financing and Money Laundering Directorate, Shlomit Wagman, said this new framework will reduce criminal activity in the crypto-asset ecosystem while increasing the legitimacy of the industry. Industry members he hoped that these new rules will facilitate their relationship with local banks. As Israel steps up its efforts to regulate the crypto-asset industry, the US Treasury Department issued a press release details partnership with Israeli Finance Minister to fight ransomware November 15, 2021
🇰🇷 South Korea wants to tighten regulations on cryptoassets
South Korean regulators have been criticized by crypto-asset companies following hearings on new laws to regulate the industry. One of the bills would introduce a “know the sender” rule. As such, cryptoasset companies would be required to collect information about the identity of the issuer of every transaction they receive. Stakeholders noted that this rule would be impractical and would severely limit transactions that take place at the local level. These requirements are similar “Rule of Travel” (Recommendation 16).
To learn more about the “Travel Rule”, its impact on the industry and how your business can comply, download Elliptic’s Travel Rule Toolkit.
🇺🇸 US Department of Justice to sell crypto-assets linked to fraud
The US Department of Justice is plans to liquidate $56 million in fraud proceeds of the crypto-asset project called BitConnect. This is the largest seizure of crypto assets by US authorities. BitConnect’s lead promoter, Glenn Arcaro, has been charged with conspiring to defraud investors using a Ponzi scheme that raised more than $2 billion. As ordered by the court, the government will begin selling the seized crypto-assets to return those funds to the victims. The Ministry of Justice encourages victims of fraud to to reach out.
