Any major global event or political crisis these days can spark a discussion about digital assets. As China welcomes the world’s top athletes to the 2022 Winter Olympics in Beijing by showcasing high-tech facilities and sports infrastructure, some US politicians have raised concerns that the Games could be a catalyst for the adoption of the digital yuan. In neighboring Myanmar, the military government that ousted the country’s elected leadership a year ago has launched its own digital currency, not to exercise economic leverage, but to improve the local payment system and the overburdened economy in general.
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So many good things
The past week saw several positive developments on the US regulatory front. In a major victory for the crypto industry, the House of Representatives passed a version of the American Competition Act without a clause allowing the Treasury to suppress and monitor certain financial transactions without due process. This position, and his ability to give the government unsupervised powers to censor transactions, came thanks to cryptocurrency group Coin Center and other allies.
Another setback for the tax authorities came from the courtroom. The agency offered the Tezos block auditor, which is suing the tax authorities for taxing the bonuses, a settlement that included a refund of the taxes paid. However, the plaintiff took a principled position and rejected the proposal, realizing that the entire evidence industry could benefit from the court’s decision in this case.
Old and new threats
However, not everything was completely rosy. As the Treasury Department’s biannual regulation program has shown, the infamous “unmanaged portfolio” rule may be back on the table. The rule was first proposed at the end of 2020 and would require cryptocurrency exchanges to collect and report transaction data and personal information about anyone trading in self-sustaining crypto wallets, that is, those not served by a broker. The rule will work, for example, if a user of a regulated exchange withdraws more than 3000 dollars to his own wallet.
Another source of potential regulatory pressure is the recent proposal by the Securities and Exchange Commission to expand the definition of an exchange to include “communication protocol systems.” This will likely include the DeFi protocols that facilitate the trading of digital assets that are considered securities by the SEC, i.e. most cryptocurrencies.
If you can’t beat them, tax them
Judging by last week’s news, many countries that have been flirting with the idea of a blanket ban on digital assets will probably contemplate when they find out how much tax revenue is waiting to be extracted. The Russian government has presented an attractive estimate of the total amount of citizens’ cryptocurrency (likely subject to tax), which could weigh on the weight of the debate between the country’s central bank and the Treasury over whether cryptocurrencies should be banned or regulated. . . In India, the Ministry of Finance has announced that a CBDC will be launched later this year or next along with a 30% tax on cryptocurrencies. The increase in adoption has also inspired the Colombian tax authorities to announce a crackdown on crypto tax evasion, while the Venezuelan government wants to introduce a new 20% tax on some crypto transactions.