🌐 The HODL Regulatory Radar | June 19, 2024 ⛈️
Stay ahead of the curve in the world of Web3 with our bite-sized weekly regulatory updates!
1. EBA Releases Comprehensive Guidelines Under MiCA Regulation 🇪🇺
The European Banking Authority (EBA) has issued a detailed package of technical standards and guidelines under the Markets in Crypto-Assets (MiCA) regulation, offering regulatory clarity for asset-referenced tokens (ARTs) and e-money tokens (EMTs). Covering six key areas, including stress testing, asset reserves, and recovery plans, the guidelines emphasize the need for token issuers to maintain sufficient financial resources to mitigate potential risks. Issuers must also assess their risk levels, which could necessitate increased own fund reserves.
The EBA outlines a procedure for issuers to adjust their own funds to 3% of the average reserve of significant assets, with a 25-working-day timeframe for implementation plans and a maximum of six months to achieve compliance. Additionally, the guidelines set minimum percentages for asset reserves based on daily and weekly maturities and limit the concentration of highly liquid financial instruments linked to assets like commodities or real estate. Recovery plans must now include specific communication and disclosure content, and a new provision clarifies that asset reserve requirements do not apply to EMT issuers already exempted by legislation.
2. Consensys Reports of SEC Closing Investigation Into Ethereum 👀
In a June 19 X post, Consensys announced that the SEC's Enforcement Division had closed its investigation into Ethereum 2.0. This decision means the SEC will not bring charges alleging that sales of ETH are securities transactions. Consensys celebrated this as a significant win for Ethereum developers, technology providers, and industry participants. The decision followed a letter from Consensys to the SEC on June 7, requesting an end to the investigation after the regulator approved spot ETH ETFs in May, suggesting ETH is a commodity. Consensys also shared the SEC's response letter, stating that the agency does not "intend to recommend an enforcement action." This development comes after reports in March that the SEC had issued subpoenas to multiple companies related to efforts to classify ETH as a security.
3. Uphold to Delist Six Stablecoins Ahead of MiCA Regulations ❎
Crypto exchange Uphold has notified its European users that it will cease support for six popular stablecoins starting July 1. The delisted stablecoins are Tether (USDT), DAI, Frax Protocol (FRAX), Gemini dollar (GUSD), Pax dollar (USDP), and TrueUSD (TUSD). Uphold's decision aligns with the European Union’s upcoming Markets in Crypto-Assets Regulation (MiCA), effective June 30, which imposes stricter regulatory requirements on fiat-backed stablecoins and e-money tokens that surpass a set adoption threshold. MiCA mandates that stablecoin issuers in the EU must be licensed as credit institutions or Electronic Money Institutions. Uphold has advised users to convert their holdings in these stablecoins to another cryptocurrency by June 28, after which the exchange will automatically convert any remaining stablecoin balances into USD.
4. Brazil's Tax Authority to Probe Foreign Crypto Exchanges for Compliance 🇧🇷
Brazil's Receita Federal do Brasil (Federal Revenue of Brazil) is planning to gather information from foreign crypto exchanges to assess their operations in the country and ensure compliance with new tax laws. A report by Reuters on June 18 indicated that an ordinance summoning these firms for further details is expected to be published this week. Last December, Brazil enacted a law requiring residents to pay a 15% income tax on profits and dividends from crypto transactions on foreign exchanges. Previously, only local exchanges had been required to report transactions.
5. Ethiopia’s Central Bank Prepares Legal Framework for CBDCs 🇪🇹
The National Bank of Ethiopia (NBE) has drafted two proclamations as part of an economic reform plan, including the establishment of a legal framework for a CBDC. The NBE Proclamation aims to introduce a legal framework for CBDCs, increase the bank’s capital, and enhance consumer protection. The accompanying Banking Business Proclamation addresses the liberalization of foreign investment in banking, corrective measures for struggling banks, and the creation of a regulatory sandbox for innovative financial solutions. These proclamations have been approved by the Council of Ministers and will soon be presented to the House of Representatives.
6. NYDFS Grants Cumberland BitLicense 🗽
On June 17, the New York State Department of Financial Services (NYDFS) granted crypto trading firm Cumberland a BitLicense, allowing it to operate as a virtual currency company. Cumberland plans to use the license to establish strong trading relationships with institutional New York counterparties. The firm is among only 33 companies listed on the NYDFS website holding a BitLicense, and it claims to be the only principal trading firms with this authorization.
7. Malaysia's Inland Revenue Board Cracks Down on Crypto Tax Evasion 🇲🇾
Malaysia’s Inland Revenue Board (IRB) conducted "Ops Token," a special operation aimed at reducing tax revenue leakage from crypto trading. According to local media, 38 personnel from the Royal Malaysia Police and CyberSecurity Malaysia (CSM) raided 10 locations within Klang Valley. The operation targeted companies that failed to report their crypto trading activities accurately to the federal agency. The IRB stated that the data collected during the operation will be analyzed to assess the value of crypto assets traded and profits generated, aiding in identifying the extent of undeclared tax revenue.
8. Turkey to Introduce New 0.03% Tax on Crypto Trading 🇹🇷
Turkey is set to implement new taxes, including a 0.03% transaction tax on cryptocurrency trading, as part of a broad fiscal reform to address the country's budget deficit, exacerbated by the 2023 earthquakes. According to Bloomberg, this proposed tax on crypto trading aims to generate substantial revenue to bolster the country's economic stability. The Turkish government anticipates the new tax reforms will raise 226 billion liras ($7 billion), which is approximately 0.7% of the nation's gross domestic product. This move targets the increasing popularity of cryptocurrency trading among Turkish investors, who view it as a hedge against inflation and currency depreciation.
9. Hashdex Proposes Combined Bitcoin and Ether ETF 🤝
In a June 18 filing with the U.S. SEC, Hashdex proposed creating a combined spot Bitcoin (BTC) and Ether (ETH) exchange-traded fund (ETF) on the Nasdaq exchange. The ETF would balance the crypto assets based on their market capitalizations, with Coinbase and BitGo serving as custodians for the BTC and ETH assets.
10. Taiwanese Man Faces Deferred Prosecution for Betting on 2024 Elections via Crypto Platform 🇹🇼
Prosecutors in Taiwan have accused a man of using the crypto betting platform Polymarket to place bets on the country's 2024 elections. The Shilin District Prosecutor’s Office alleged that the man wagered approximately 472 USD Coin (USDC) on Ko Wen-je, the Taiwan People’s Party candidate, winning the presidential election, and placed a $60 bet on the Democratic Progressive Party securing more legislative seats. The investigation revealed that he violated Taiwan's laws prohibiting online gambling on election results, specifically under the President and Vice President Election Recall Act. The man admitted to the crime and, due to having no prior convictions, was granted deferred prosecution for one year with a fine of 30,000 yuan (about $4,000).