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🇺🇸 Senate drama leaves crypto tax fate in limbo
Debates surrounding cryptocurrencies this week brought plenty of drama in Washington, but left the crypto industry concerned about the state of the upcoming tax requirements.
On August 10, the Senate did not give its consent bipartisan compromise amendment to a major infrastructure spending bill that would limit the US Treasury’s ability to impose certain tax reporting requirements about crypto miners and non-custodial wallet services. Failure to pass the amendment — which had the blessing Treasury Secretary Janet Yellennumerous senators from the Democratic and Republican parties, and reluctant buy-in crypto industry – there was opposition from a lone senator, Richard Shelby of Alabama, who blocked a vote on the crypto proposal due to the Senate’s refusal to consider his plan for more military spending.
The amendment’s failure to pass followed nearly two weeks of debate that kept one of President Joe Biden’s priority bills on hold. It leaves open the prospect that the bill could pass Congress without any changes to the original language, which crypto lobby groups argue could allow the Treasury Department to impose tax reporting requirements on miners and software developers—although the Treasury Department and the bill’s sponsors to deny that the purpose of the law is to impose requirements on those parties. The hope that the legislation will change is still not over for the industry, which is he is already lobbying in the US House of Representatives— where the bill will be considered after Congress’s August recess — to adopt changes to the controversial wording.
While the outcome was disappointing for the industry, the fact that the debate took place at all was a sign that the crypto industry is growing taken seriously in Washingtonand is a force to be reckoned with in policy-making circles. The debate also revealed that there is a growing segment of the US Congress that is learning quickly about cryptocurrencies, is informed and educated about policy issues, and seeks to promote innovation by encouraging industry development – ​​as noted by senators Lummis, Wyden, Toomey and others indicated.
At Elliptic, we firmly believe that preventing crimes like tax evasion through cryptoassets is essential to building confidence in the industry and promoting its growth. Extending tax reporting requirements to crypto companies that are in a position to gather relevant information is reasonable and good for taxpayers where their accounting burden is simplified.
However, we also believe that any law should include built-in safeguards that prevent those requirements from being extended through future rulemaking to miners, software developers, and others who cannot practically collect user information for tax reporting purposes.
We hope the House will amend the bill’s language, and we will support the work of our partners in industry groups such as Coin Center because they continue to advocate for reasonable provisions in this law.
🇺🇸 BitMEX Pays $100 Million to Resolve AML Compliance Violations
This week, crypto derivatives giant BitMEX agreed to pay $100 million to settle charges with US regulators. August 10 US Treasury’s Financial Crimes Enforcement Network (FinCEN) and Commodity Futures Trading Commission released details of the settlement, in which BitMEX admitted that it failed to register with the CFTC and that it willfully violated US anti-money laundering (AML) laws, including failing to adequately transaction tracking. BitMEX separately published statement outlining the changes it has made to its compliance program to correct past failures, and signaled its commitment to a strong compliance culture going forward. The case illustrates why it is critical for crypto companies to adopt a compliance-first mindset from day one, and should dispel notions that crypto is merely an unregulated “Wild West.” As Elliptic’s research has shown, US regulators have already issued fines against crypto companies more than 2.5 billion dollars— a sign of intense regulatory focus on compliance in the crypto space.
🇸🇬 DBS receives Singapore regulatory approval to offer digital asset services
The Monetary Authority of Singapore (MAS) has given DBS Vickers, the brokerage arm of Singapore-based DBS Bank, conditional approval offer crypto asset trading services. This makes DBS, which is the first announced its plan to launch a digital asset exchange and custody service in December 2020, only the second business in Singapore to receive approval from the MAS to offer cryptocurrency trading in the country. (The first was Independent Reservewhich received conditional approval from MAS two weeks ago.) MAS has set a very high bar for applicants seeking licenses to offer crypto services – resulting in 30 applicants for withdraw your applications all together.
Contact us to learn more about how we can help your businesses meet MAS requirements for cryptoasset service providers and view our latest webinar on compliance with the Singapore Travel Rules. Congratulations to DBS on this important achievement!
🇺🇸 SEC Chairman Signals Urgency on DeFi
On August 11, US Senator Elizabeth Warren was released a letter from Securities and Exchange Commission Chairman Gary Gensler giving a clear indication that US regulators are targeting decentralized finance (DeFi). In his letter Gensler, who like us detailed last week seeks to increase the SEC’s oversight of crypto markets, has called on Congress to pass legislation that will allow regulators to more effectively oversee DeFi platforms and services. While the SEC recently passed accusations fraud and running an unregistered brokerage against DeFi lender Blockchain Credit Partners, Gensler’s request to Senator Warren for Congress indicates that regulators feel they need more tools in their arsenal to deal with the incredible the complex regulatory challenges surrounding DeFi.
🇦🇺 Australia’s crypto industry is begging for regulatory clarity
On August 6, Steve Vallas, CEO of Blockchain Australiatestified before the Senate Committee on Australia as a technology and financial center. His message was simple: Australia must move faster to provide regulatory clarity to the crypto industry, or risk driving crypto businesses away. In his testimonycalled on the public sector to urgently engage in more regular dialogue with Australia’s crypto industry. As members of Blockchain Australia, Elliptic could not agree more with the need for strong public and private sector engagement as key to ensuring that successful regulation and innovation coincide. To learn more about regulatory developments in Australia and the wider APAC region, see our webinar with Steve since March of this year.
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