Global Digital Assets Digest September 2022
07 October 2022
IN THIS EDITION we will cover: |
---|
UPDATES AND GUIDANCE: INTERNATIONAL BODIES 1. EU legislators: Agreed text of MICA 2. FIA: Consultation response to the second Basel Committee consultative document 3. ECB: Report on progress on the investigation phase of a digital euro 4. ECB: Speech by Fabio Panetta: Building on our strengths: the role of the public and private sectors in the digital euro ecosystem 5. EBA: Work Programme 2023 6. IMF: Report on Central Bank Digital Currencies in Asia and the Pacific 7. BIS: Speech: Opportunities and challenges of the tokenisation of finance: which role for central banks 8. BIS: Speech: Anchors and catalysts - central banks' dual role in innovation 9. ESMA: Report on the Call for Evidence on the DLT Pilot Regime and compensatory measures on supervisory data 10. ECB: Speech by Fabio Panetta: Demystifying wholesale central bank digital currency 11. European Commission: Speech: 2022 State of the Union Address by President von der Leyen 12. BIS (CPMI): Paper: Liquidity bridges across central banks for cross-border payments 13. ICMA: Appointment of Head of Fintech and Digitalisation 14. ESMA: Report: Trends, Risks and Vulnerabilities report (No 2 2022) 15. FSB: Speech by Dietrich Domanski: Making the most of digital payments – a cross-border perspective |
UPDATES AND GUIDANCE: UK 16. Bank of England: Speech by Dave Ramsden: Message received and understood 17. Bank of England: Speech by Sir Jon Cunliffe: Innovation in post trade services - opportunities, risks and the role for the public sector 18. Economic Crime and Corporate Transparency Bill 2022 19. House of Commons: Research briefing: Government’s regulatory approach to cryptoassets and currencies (CDP-2022-0150) 20. FOS: Webpage: Quarterly complaints data: Q1 2022/23 21. House of Commons (Treasury Committee): Report: Future of financial services regulation: responses to the Committee’s First Report 22. Financial Services and Markets Bill – Second reading 23. Bank of England: Report: Real-Time Gross Settlement system and CHAPS Annual Report 2021/22 |
UPDATES AND GUIDANCE: EUROPE 24. Germany: FinTech Innovation Hub of BaFin 25. Germany: Guidance on crypto securities register management licensing procedure |
UPDATES AND GUIDANCE: APAC 26. MAS: Speech by Mr Ravi Menon at the Green Shoots Seminar 27. Singapore High Court: Finding in respect of chairman of BK Group 28. Singapore High Court : Hodlnaut placed under IJM 29. Three Arrows Capital: Probe of assets |
UPDATES AND GUIDANCE: AUSTRALIA 30. Reserve Bank releases White Paper on CBDC pilot 31. Australian Board of Taxation commences digital asset review 32. Treasury: Crypto is not a foreign currency 33. ASIC: Corporate Plan 2022-26: Cryptoassets a strategic priority |
UPDATES AND GUIDANCE: NORTH AMERICA 34. US Department of Justice Releases Report on Law Enforcement in Digital Assets and Establishes Nationwide Digital Asset Coordinator Network 35. White House Releases First-Ever Comprehensive Framework for Responsible Development of Digital Assets 36. US Department of the Treasury's Office of Foreign Assets Control Issues FAQs Clarifying Sanctions Against Tornado Cash 37. US Securities and Exchange Commission Announces New Office for Crypto Filings 38. US Federal Deposit Insurance Corporation Issues Cease and Desist Letters to Five Companies For Making Crypto-Related False or Misleading Representations about Deposit Insurance |
PRESS/ARTICLES 39. Guardian: South Korea asks Interpol to prevent Terra founder from fleeing extradition 40. Reuters: Ethereum blockchain major upgrade |
1. EU legislators: Agreed text of MICAOn 5 October 2022, the Council of the EU released an information note attaching a letter sent to the European Parliament Economic and Monetary Affairs Committee on progress made in relation to relating to MiCA. The letter confirms that a draft overall compromise package has been agreed by the Council's Permanent Representative Committee and that if the European Parliament adopts its position at first reading in the form set out in the Annex to the letter, the Council will approve the Parliament's position and adopt the act. MiCA was introduced by the European Commission in October 2020 (see our briefing here) as part of the EU Digital Finance Package. The Council and the Parliament reached political agreement on MiCA in June 2022. 2. FIA: Consultation Response: FIA EPTA response to the second Basel Committee Consultative Document “Prudential treatment of crypto asset exposuresOn 30 September 2022, FIA issued a response to the second Basel Committee consultation in the prudential treatment of cryptoassets. The consultation had set out a number of proposals including the development of the specific standards text for inclusion in the Basel Framework in the form of new chapter (SCO60). In the response, the FIA argues that without clarification the proposed framework would undermine consensus post-crisis reforms and discourage banks from facilitating the central clearing of crypto-asset linked derivatives. Key points
3. ECB: Publication: Progress on the investigation phase of a digital euroOn 29 September 2022, the ECB issued a report on the progress made during the investigation phase of the digital euro project.. The report confirms that there will be a holistic review at the end of the investigation phase on the overall design of a digital euro. The ECB has also issued a letter from Fabio Panetta to Irene Tinagli, ECON Chair summarising the report and next steps. Key points
4. ECB: Speech by Fabio Panetta: Building on our strengths: the role of the public and private sectors in the digital euro ecosystemOn 29 September 2022, the ECB issued a speech by Fabio Panetta, Member of the Executive Board of the ECB, at the Committee on Economic and Monetary Affairs of the European Parliament on the role of the Eurosystem and private market participants in the digital euro ecosystem. Key points
The ECB will start work on a rulebook for a the digital euro scheme as it considers it is best suited to achieve objectives. The digital euro scheme would contain a common framework for euro area intermediaries to develop products and services built on a digital euro, establishing a set of common operational rules and technical standards. 5. EBA: Work Programme 2023On 29 September 2022, the EBA published its 2023 Work Programme. The Work Programme package summarises the main objectives, priorities and deliverables of the EBA in the future and is based on tasks specified in relevant EU banking sector legislation. The EBA's work for 2023 is defined under five strategic areas (one of which is digital finance and the delivery of MiCA/DORA mandates) and 19 activities. The EBA states that it will need to develop policy work from MiCA in advance of the application date. Outputs foreseen by the Work Programme include consultation papers on regulatory technical standards covering: information to be submitted in an application for authorisation to issue asset referenced tokens (ARTs); the use of ARTs as a means of payment; conflicts of interest; complaints handling; and governance arrangements. 6. IMF: Publication: Fintech - Towards Central Bank Digital Currencies in Asia and the Pacific: Results of a Regional SurveyOn 28 September 2022, the IMF issued a report on central bank digital currencies in Asia and the Pacific. The report provides an overview of recent developments related to CBDCs and cryptoassets in Asia, drawing on survey responses from 34 Asian economies and country case studies. Despite a variety of outcomes, the report states that most countries in the region are currently undertaking some form of research into a CBDC, with some at advanced stages of testing and pilots. Key points
7. BIS: Speech: Opportunities and challenges of the tokenisation of finance: which role for central banksOn 28 September 2022, BIS issued a speech by Denis Beau, First Deputy Governor, on the role of central banks in the tokenisation of finance. Notable points
8. BIS: Speech: Anchors and catalysts - central banks' dual role in innovationOn 28 September 2022, BIS issued a speech by François Villeroy de Galhau, Governor of the Bank of France, on central banks' dual role in innovation. In his speech, Mr Villeroy de Galhau spoke of how the so-called "triangle of disruptions (new players; new settlement assets based on blockchain; and new decentralised market infrastructures could) offer the potential for cheaper and faster services but could also lead to fragmentation and to systemic risk. In the speech, Villeroy de Galhau called for a swift adoption of MiCA and welcomed the agreement on the extension of transparency rules to transfers of cryptoassets. Noting slower progress in other jurisdictions, Mr warned against Villeroy de Galhau diverging or contradictory regulations and argued that the regulation of cryptoassets payments more broadly calls for "pragmatic" or "focused" multilateralism. Mr Villeroy de Galhau also argues that a wholesale CBDC could significantly contribute to improving cross-border and cross-currency payments and not offering them could encourage the uptake of stablecoins. 9. ESMA: Report on the DLT Pilot - Regime On the Call for Evidence on the DLT Pilot Regime and compensatory measures on supervisory dataOn 27 September 2022, ESMA published a report following its call for evidence on the Regulation on a pilot regime for market infrastructures based on distributed ledger technology (see our briefing for further details). Under the Regulation, ESMA is required to assess whether the RTS developed under MiFIR relative to certain pre- and post-trade transparency and data reporting requirements need to be amended to be effectively applied also to securities issued, traded, and recorded on DLT. In the report, ESMA concludes that there is no need to amend the RTS on transparency and data reporting requirements before the DLT Pilot starts applying in March 2023. ESMA confirms that it will work on supervisory guidance clarifying the application of certain elements of the RTS on transparency and data reporting requirements. ESMA confirms that it will also issue guidance on questions received by various stakeholders on the DLT Pilot. 10. ECB: Speech by Fabio Panetta: Demystifying wholesale central bank digital currencyOn 26 September 2022, the ECB issued a speech on wholesale central bank digital currency by Fabio Panetta Member of the Executive Board of the ECB, at the Symposium on “Payments and Securities Settlement in Europe – today and tomorrow” hosted by the Deutsche Bundesbank. Key points
The Eurosystem is exploring ways in which market participants who adopt DLT could interact with the TARGET Services to settle the euro cash leg of their transactions in central bank money: creating a bridge between market DLT platforms and central bank infrastructures; or creating a new DLT-based wholesale settlement service with DLT-based central bank money. 11. European Commission: Speech: 2022 State of the Union Address by President von der LeyenOn 14 September 2022, European Commission President, Ursula von der Leyen, made her annual State of the Union speech. The speech and accompanying letter of intent look back at the Commission's achievements, set out the priorities for the year ahead and introduce initiatives that will likely be included. In the letter of intent President von der Leyen refers to the rising importance of digital transformations and states that the European Commission will continue looking at new digital opportunities and trends, such as the Metaverse. The speech also makes references to key initiatives for 2023, including possible legislative proposals on establishing the digital euro. 12. BIS (CPMI): Paper: Liquidity bridges across central banks for cross-border paymentsOn 7 September 2022, BIS issued a report on liquidity bridges in relation to central banks for cross-border payments. The report, produced by the Committee on Payments and Market Infrastructures (CPMI) Cross-Border Payments Liquidity Workstream, completes the second action of Building Block 11 of the 19 Building Blocks set out in the G20 Cross-Border Payments Programme (reciprocal liquidity arrangements across central banks). The report is intended to set out a framework for central banks in considering the potential design and feature choices of central bank liquidity bridges and is intended to assist them with deciding whether to establish liquidity bridges. The report considers a liquidity bridge to be a cross-currency intraday liquidity arrangement between two or more central banks where large-value payment system (LVPS) participants pledge collateral (typically cash) to a given central bank (facilitating central bank) in exchange for short-term (typically intraday) liquidity from another central bank (lending central bank) in the latter’s currency. Input for the report is gained from information gathered about the two liquidity bridges already in existence: a bilateral liquidity bridge between the BoE and DNB; and a multilateral liquidity bridge arrangement among the central banks of Denmark, Sweden and Norway – the Scandinavian Cash Pool. 13. European Commission: Speech by Mairead McGuinness, European Commissioner for Financial Stability, Financial Services and the Capital Markets Union: Financial literacyOn 7 September 2022, the European Commission issued a speech by Mairead McGuinness, European Commissioner for Financial Stability, Financial Services and the Capital Markets Union in relation to financial literacy. In the speech, Ms McGuiness outlined why financial literacy was important and referred to efforts to promote financial literacy via the Capital Markets Union, as well as the OECD framework on financial literacy, which is being developed with the European Commission. Ms McGuiness notes that the framework sets out in detail the different knowledge, skills and attitudes that adults need to have in order to be financially literate and that the framework now has competences pertaining to digital currencies, digital tools and payment methods and cryptoassets. 14. ICMA: Appoints Head of Fintech and DigitalisationOn 5 September 2022, ICMA issued a speech confirming the appointment of Georgina Jarratt as Managing Director, Head of Fintech and Digitalisation and as a new member of the Executive Committee. The speech notes that Fintech and digitalisation are transforming financial markets. The announcement refers to various ICMA initiatives including: the Common Domain Model (CDM) for repo and bonds and the Common Data Dictionary for primary bond markets, as well as running established working groups on DLT and blockchain in bond markets and market electronification. 15. ESMA: Report: Trends, Risks and Vulnerabilities report (No 2 2022)On 1 September 2022, ESMA published its second Trends, Risks and Vulnerabilities report of 2022. The report contains some data in relation to cryptoassets sector. Key points
16. FSB: Speech by Dietrich Domanski: Making the most of digital payments – a cross-border perspectiveOn 31 August 2022, the FSB issued a keynote speech by Dietrich Domanski, Secretary General, Financial Stability Board, at the CBDC Conference 2022.The speech notes looks at the role financial regulation plays in promoting efficient and safe cross-border digital payments, referring to various initiatives (such as the FSB's Cross Border Payments Roadmap) to improve cross border payments. He spoke about how the FSB approached harnessing the benefits of innovation while containing the risks at a practical level. Mr Domanski,notes financial stability implications of volatility of stablecoin markets and notes that participants in cryptoassets sector often combine activities that fall under different sectoral regimes (e.g. trading platforms often integrate vertically activities such as trading, order pairing, settlement, lending provisioning, proprietary trading, brokerage and custody services). Key next steps
|
Updates and Guidance: UK |
17. Bank of England: Speech by Dave Ramsden: Message received and understoodOn 29 September 2022, the Bank of England issued a speech by Dave Ramsden on the usefulness of real-life data in helping the Bank meet its monetary and financial objectives. In the speech, Mr Ramsden looks in particular at how the Bank is working on improving the quality of payments data. Mr Ramsden argues that the COVID-19 pandemic served as a catalyst for extending use of the Bank’s payments data and the role played by CHAPS. Mr Ramsden also refers to the renewal of the Bank’s Real Time Gross Settlement (RTGS) Service and the possible impact of ISO 20022 on tackling fraud and financial crime. Mr Ramsden states that the UK has been playing a leading role in the work programme led by FSB and states that stakeholders should renew their efforts in relation to the G20 Roadmap for Cross-Border Payments. 18. Bank of England: Speech by Sir Jon Cunliffe: Innovation in post trade services - opportunities, risks and the role for the public sectorOn 28 September 2022, the Bank of England issued a speech by Jon Cunliffe on innovation in post-trade services. The speech noted the increasing regulatory scrutiny of the cryptoassets sector.
19. Economic Crime and Corporate Transparency Bill 2022On 22 September 2022, the Economic Crime and Corporate Transparency Bill 2022 was introduced into the House of Commons. It follows the Economic Crime (Transparency and Enforcement) Act, which received Royal Assent in 2022 and is designed to tackle economic crime and improve transparency over corporate entities. The Bill includes amendments to the Proceeds of Crime Act 2002 (POCA) to support the recovery of cryptoassets. Notable provisions
20. House of Commons: Research briefing: Government’s regulatory approach to cryptoassets and currenciesOn 8 September 2022, the House of Commons issued a report on the Government’s regulatory approach to cryptoassets and currencies. Areas covered are: what are cryptoassets; UK regulation of crypotassets; press notices; and parliamentary material. The report notes that, overall, UK regulators have attempted to balance supporting innovation with protecting consumers and financial stability and summarises legal and regulatory position in relation to cryptoassets. 21. FOS: Webpage: Quarterly complaints data: Q1 2022/23On 7 September 2022 FOS updated its webpage on quarterly complaints data, covering the period April to June 2022. The quarterly updates on financial products and services include the number of enquiries and new cases received, and the proportion of complaints resolved in favour of customers. The webpage states that between April and June 2022, FOS received 65,740 new enquiries and 35,029 new complaints about financial products, upholding on average 34 per cent of these complaints. The webpage states that investment scams have seen the biggest increase as a proportion of “authorised” scam complaints (and over half of these complaints involve cryptocurrency), despite the number of “authorised” scam complaints decreasing overall. Authorised scams refer to scams where a person or business is tricked into sending money to a fraudster posing as a genuine account holder. FOS notes that in investment scams involving cryptocurrency, consumers are promised an investment that did not materialise, or are persuaded to open a cryptocurrency account and inadvertently sent money to a fraudster. 22. House of Commons (Treasury Committee): Report: Future of financial services regulation: responses to the Committee’s First ReportOn 7 September 2022, the House of Commons Treasury Committee published responses from the Government, PRA and FCA to its June 2022 report on the Future of Financial Services Regulation. The report contains details of the Government's response to the observation made by the Committee about innovations taking place in payments systems and in relation to alternative means of exchange (such as cryptoassets) and the benefits and challenges that this poses. The Government summarises work it has done in relation to bringing stablecoins as a means of payment within the UK regulatory perimeter; its work on the adequacy of the regulatory perimeter for payments; the central bank digital currency Taskforce; and the regulation of cryptoasset financial promotions. The FCA also summarises its work in relation to FCA Innovation Services. 23. Financial Services and Markets Bill 2022-23– Second readingOn 7 September 2022, the Financial Services and Markets Bill 2022-23 had its second reading in the House of Commons. The Bill contains provisions relating to stablecoins as payments and DLT. It was introduced into the House of Commons on 20 July 2022. Key provisions of the Bill include an FCA authorisation and supervision regime for issuers of, and payment service providers using stablecoins; enabling HM Treasury to apply a bespoke administration regime (the Financial Markets Infrastructure Special Administration Regime (FMI SAR)) in respect of digital settlement asset firm, as consulted on earlier this year; permitting HM Treasury to establish one or more FMI sandboxes. 24. Bank of England: Report: Real-Time Gross Settlement (RTGS) system and CHAPS Annual Report 2021/22On 6 September 2022, the Bank of England published its Annual Report for RTGS and CHAPS. The report notes that the RTGS Renewal Programme has had to deal with challenges but continues to progress. The report states that for 2021/22, focus was on "preparation and realisation", ahead of the transition to the renewed RTGS and that key outcomes and activities were focused around four strategic themes: safe and resilient; well run; responsive; and renewed. Developments in this regard include: a new operational resilience framework adopted in April 2022; a new version of the CHAPS Reference Manual which took effect in January 2022; an April 2022 consultation on a tariff for the renewed RTGS service and a second consultation on the future roadmap for RTGS following the delivery of a new core ledger in 2024; and a revised timetable for the implementation of the RTGS Renewal Programme to be undertaken in a single stage in April 2023. The report confirms that towards the end of 2022, the Bank of England will publish a response to the consultation on the post-2024 roadmap for RTGS. The report also states that in in 2021/22, the Bank of England looked at recent developments in digital identification within the payments industry (in collaboration with the Bank’s FinTech Hub), the delivery of the New Payments Architecture, activity in the cross-border payments space, digitalisation and automation, and increased interest in distributed ledger technology solutions. |
25. FinTech Innovation Hub of BaFinOn 1 September 2022, the Federal Financial Supervisory Authority (BaFin) launched its FinTech Innovation Hub (available in German only). The hub offers a structured overview and regulatory assessment of various fintech business models and provides further information on necessary licences and applicable regulatory provisions. 26. Guidance on crypto securities register management licensing procedureOn 1 June 2022, BaFin published guidance on the crypto securities register management (Kryptowertpapierregisterführung) licensing procedure (available in German only). Since this new financial service has been included in the German Banking Act (KWG), entities that intend to provide the service do need a BaFin licence. The guidance provides interested entities with relevant information on the licensing procedure. |
27. MAS: Speech by Mr Ravi Menon at the Green Shoots SeminarOn 29 August 2022, Mr Ravi Menon, the Managing Director of the Monetary Authority of Singapore (MAS) gave a speech at the Green Shoots Seminar, clarifying the MAS' stance on cryptocurrency and digital assets: namely that it maintains a restrictive stance on cryptocurrency speculation because of the inherent volatility and the risks that it poses to the general public, particularly retail investors. Amongst other things, the MAS has announced that it is taking a "four-pronged approach" to building the digital asset ecosystem: exploring the potential of distributed ledger technology in promising use cases; supporting the tokenisation of financial and real economy assets; enabling digital currency connectivity; and anchoring players with strong value propositions and risk management. In addition, the MAS has emphasised the five areas of risk in digital assets that its regulatory approach is focused on, namely: first, combat money laundering and terrorist financing risks; second, manage technology and cyber related risks; third, safeguard against harm to retail investors by including customer suitability tests and restricting the use of leverage and credit facilities for cryptocurrency trading; fourth, uphold the promise of stability in stablecoins; and fifth, mitigate potential financial stability risks. Ultimately, the MAS has reiterated that it is seeking to adopt a "synergistic and holistic approach" to develop Singapore as an "innovative and responsible global digital asset hub". 28. Singapore High Court: Finding in respect of chairman of BK GroupOn 26 August 2022, the Singapore High Court found that Kim Byung-gun, the chairman of BK Group who wanted to acquire Bithumb Holdings (the second-largest virtual asset exchange in Korea, with more than 8 million registered users to date) was guilty of selling BXA coins without first obtaining the permission of Lee Jung-hoon, the former chairman of Bithumb Holdings. Kim had previously accused Lee of defrauding him in the process of a jointly planned acquisition of Bithumb, and had commenced trial against Lee in South Korea. However, the Singapore High Court has now ordered Kim to return the proceeds gained from the sale of BXA coins to Singapore-based consortium BTHMN. A copy of the Singapore High Court's decision is available here. 29. Singapore High Court : Hodlnaut placed under interim judicial managementOn 29 August 2022, cryptocurrency lender, Hodlnaut, was placed under interim judicial management, three weeks after it froze withdrawals, owing to "difficult market conditions". This comes after it had previously applied to be put under judicial management on 13 August 2022. The Singapore High Court deemed it appropriate to place Hodlnaut under IJM as the company’s "assets were probably in some jeopardy and that the directors and management of the [c]ompany would not be able to function without being liable for insolvent trading at this time". A copy of the Singapore High Court's decision is available here. |
30. Reserve Bank releases White Paper on CBDC pilotOn 26 September 2022, the Reserve Bank of Australia and the Digital Finance Cooperative Research Centre released a White Paper entitled "Australian CBDC Pilot for Digital Finance Innovation". It describes a joint research project to explore use cases for a central bank digital currency (CBDC or eAUD) in Australia. The project intends to test a general-purpose pilot CBDC issued as a liability of the Reserve Bank of Australia for use in real world/live implementations of services offered by Australian industry participants, both wholesale and retail. The initial set of research questions to be addressed by the project include what, if any, are the emerging business models and use cases that a CBDC would support, that are not effectively supported by existing payments and settlement infrastructures in Australia. The selected use case providers for the live pilot will be announced in December 2022. In mid-2023, a report will be published with findings that will contribute to the ongoing research into the desirability and feasibility of a CBDC in Australia. 31. Australian Board of Taxation commences digital asset reviewThe Board of Taxation, a non-statutory advisory body to the Australian Government, has commenced a review into the tax treatment of digital assets and transactions in Australia. This review stems from a request of the former Government in March 2022, to review and make recommendations on an appropriate policy framework for the taxation of digital assets and transactions in Australia. The terms of reference of the review include: the current Australian taxation treatment of digital assets and transactions and emerging tax policy issues; the characteristics and features of digital assets and transactions in the market, including the rapid evolution of technology supporting the broader digital asset ecosystem; and the taxation of digital assets and transactions in comparative jurisdictions and how international experience may inform the taxation of digital assets and transactions in Australia. There have been some comments made about the effectiveness and value of this review given that the current Government has recently announced a "token mapping" exercise (as mentioned in the August edition of this Digest). It is likely that the findings of the Government's token mapping exercise, which will consider the proper legal and regulatory treatment of digital assets, will inform the appropriate tax treatment of the different types of digital assets, rendering it premature to provide submissions to the Board of Taxation's review on the optimal tax treatment of those assets before the token mapping exercise is complete. Submissions to the Board of Taxation's review are due by 30 September 2022, with a view for the Board to report back to the Government by the end of this year. 32. Treasury: Crypto is not a foreign currencyThe Treasury has released an exposure draft of the Treasury Laws Amendment (Measures for Consultation) Bill 2022 along with a consultation paper to clarify that cryptocurrency is not a foreign currency for Australian income tax purposes. The draft legislation relies on amending the existing definition of digital currency in the A New Tax System (Goods and Services Tax) Act 1999 before adopting it as an exclusion from the definition of foreign currency in the Income Tax Assessment Act 1997 (Cth). This is relevant to an Australian Tax Office Tax Ruling (TR 2014/25) which states that Bitcoin is not a foreign currency. The ATO came to this conclusion for a number of reasons but one of the main reasons being that it is not recognised as legal tender by any government. Of course, that is no longer true given El Salvador recognises Bitcoin as legal currency. The legislation will confirm that Bitcoin (and other cryptocurrencies) are not foreign currency for tax purposes, notwithstanding their recognition a legal tender by some countries. For the purposes of the amendments, the term "digital currency" does not include digital currencies issued by, or under the authority of a government agency which continue to be taxed as a foreign currency. The closing date for comments on this exposure draft is 30 September 2022. 33. ASIC: Corporate Plan 2022-26: Cryptoassets a strategic priorityOn 22 September 2022, ASIC released its Corporate Plan 2022-26, identifying cryptoassets as a core strategic project. Actions outlined in the plan include the following: supporting the development of an effective regulatory framework focused on consumer protection and market integrity; taking enforcement action to protect consumer from harms associated with cryptoassets; and working with domestic and international peers to monitor risks, develop coordinated responses to issues and develop international policy regarding cryptoassets and decentralised finance. |
34. US Department of Justice Releases Report on Law Enforcement in Digital Assets and Establishes Nationwide Digital Asset Coordinator NetworkOn 16 September 2022, the US Department of Justice (DOJ) announced significant actions regarding digital assets, including the public release of its report, pursuant to President Biden’s 9 March 2022 Executive Order on Ensuring Responsible Development of Digital Assets, on The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets; and the establishment of the nationwide Digital Asset Coordinator (DAC) Network, in furtherance of the department’s efforts to combat the growing threat posed by the illicit use of digital assets to the American public. 35. White House Releases First-Ever Comprehensive Framework for Responsible Development of Digital AssetsOn 16 September 2022, in response to President Biden’s 9 March 2022 Executive Order on Ensuring Responsible Development of Digital Assets, the White House released a fact sheet designed to provide a comprehensive framework for the responsible development of digital assets, reflecting nine reports submitted by diverse stakeholders across government, industry, academia, and civil society. The fact sheet expressly focuses on seven issues:
36. US Department of the Treasury's Office of Foreign Assets Control Issues FAQs Clarifying Sanctions Against Tornado CashOn 13 September 2022, the US Department of the Treasury's Office of Foreign Assets Control (OFAC) published four new Frequently Asked Questions clarifying some aspects of economic sanctions that it imposed against virtual currency (VC) mixer Tornado Cash. On 8 August 2022, Tornado Cash was sanctioned by OFAC for allegedly laundering US $7 billion (including proceeds from North Korean cybercrime activity). 37. US Securities and Exchange Commission Announces New Office for Crypto FilingsOn 9 September 2022, the US Securities and Exchange Commission (SEC) announced plans to add an Office of Crypto Assets and an Office of Industrial Applications and Services to the Division of Corporation Finance's Disclosure Review Program (DRP). The Office of Crypto Assets will continue the work currently performed across the DRP to review filings involving crypto assets. Assigning companies and filings to one office will enable the DRP to better focus its resources and expertise to address the unique and evolving filing review issues related to crypto assets. 38. US Federal Deposit Insurance Corporation Issues Cease and Desist Letters to Five Companies For Making Crypto-Related False or Misleading Representations about Deposit Insurance<p">On 19 August 2022, the US Federal Deposit Insurance Corporation (FDIC) issued letters demanding the following five companies and their officers, directors, and employees cease and desist from making false and misleading statements about FDIC deposit insurance and take immediate corrective action to address these false or misleading statements:</p"><p"> Based upon evidence collected by the FDIC, each of these companies made false representations—including on their websites and social media accounts—stating or suggesting that certain crypto–related products are FDIC–insured or that stocks held in brokerage accounts are FDIC–insured. </p"> |
No updates in this months edition. |
39. Guardian: South Korea asks Interpol to prevent Terra founder from fleeing extraditionThis article reports that South Korean authorities have asked Interpol for a red notice to prevent Do Kwon, founder of Terra/Luna cryptocurrency platform, from fleeing extradition. This follows events in May 2022 which saw the collapse of the algorithmic stablecoin. 40. Reuters: Ethereum blockchain to undergo major upgradeThis article reports on the upgrade to Ethereum blockchain known as the "Merge". The upgrade changes how transactions on the Ethereum blockchain occur. The process results in Ethereum moving from a "proof of work" system to a "proof of stake" protocol. |
Contributors: Evan Lam; Zach McLoughlin; Claudia Lang; Nathan Huynh; Nicole Mazurek; Dominic Christie; Qiqing Goh; Gréta Müller and Tobias Bauerfeind.
The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
Readers should take legal advice before applying it to specific issues or transactions.