Crypto Shake-Up: France’s Bold Move Precedes MiCA’s Impact, South Korea’s New Fees, and Bahamas' Tougher Regulations! - August 2024: Edition 7
With Law (??? ??)
We, a young law firm growing globally from India, have reckoned ourselves to provide legal services with full throttle.
Get ready for a crypto rollercoaster—today’s edition is all about seismic shifts that are sending shockwaves through the digital currency world! France is throwing down the gauntlet with a bold regulatory move that’s set to outpace MiCA’s game-changing impact. Across the globe, South Korea is shaking up the scene with fresh fees that traders can’t afford to ignore. And the Bahamas? They're raising the stakes with tougher-than-ever regulations, turning paradise into a proving ground for the future of crypto. Get ready for a wild ride through the most crucial updates you need to know!
In this edition we bring to you updates focused on Blockchain. We delve into :
Cryptocurrency Price Manipulation Deemed Securities Fraud in Landmark Case
In a groundbreaking legal development, a federal jury has made history by declaring that the cryptocurrency HYDRO qualifies as a security, marking the first time a federal court has ruled that manipulating the price of a digital asset constitutes securities fraud. This ruling comes after Shane Hampton and Michael Kane were found guilty of using a trading bot to execute wash trades and spoof trades, artificially inflating HYDRO’s price and defrauding investors. Hampton has been sentenced to nearly three years in prison, while Kane faces a longer sentence of almost four years.
This landmark decision has far-reaching implications for the blockchain industry, signaling a shift in how digital assets will be regulated moving forward. By classifying HYDRO as a security, the court has extended traditional securities laws to cover certain cryptocurrencies, reinforcing the need for compliance with established financial regulations. This case underscores the increasing scrutiny from regulatory authorities on the crypto market, emphasizing the need for transparency and adherence to legal standards.
WITH LAW's Writ:
This ruling underscores the need for transparency and strict adherence to financial regulations, emphasizing the vigilance required by projects to avoid violations. It also highlights the pivotal role of regulatory bodies like the SEC in prosecuting fraudulent activities, signalling the possibility of stricter oversight and enforcement. Companies in the blockchain and cryptocurrency space must prioritize robust compliance frameworks to navigate this increasingly regulated?environment.
Greece Sets Crypto Tax Deadline: New Regulations Coming in 2025!
In a bold move to regulate the rapidly expanding cryptocurrency sector, the Greek government is set to introduce a comprehensive tax framework starting January 2025. A special committee will soon present its recommendations to the Ministry of National Economy and Finance, outlining how cryptocurrencies and digital assets will be taxed. Under the new rules, profits from trading these assets will be taxed as capital gains at a rate of 15%, aligning them with securities transactions. The committee’s report will also detail how different cryptocurrencies will be defined, recorded, and monitored.
Currently, the lack of legislation has allowed many investors to benefit from crypto gains without proper reporting, with significant profits often going undeclared. This gap in regulation has particularly affected individuals with substantial real estate holdings or those engaged in the crypto space without stable incomes. Meanwhile, Athens has seen a rise in crypto-related events and collaborations, such as the Greek stock exchange’s partnership with the Sui blockchain, which has introduced innovative fundraising methods.
WITH LAW's Writ:
The Greek government's decision to tax crypto transactions represents a significant shift in blockchain regulation, setting a potential benchmark for other countries. By instituting a clear tax framework, Greece aims to increase transparency and accountability in the crypto market, reduce illicit activities, and create a more secure investment environment. This move could serve as a model for broader EU regulatory efforts and influence global tax policies on digital assets.
?WazirX Hack Exposes Urgent Need for Robust Crypto Regulation
WazirX, a major player in India's cryptocurrency exchange scene, recently suffered a significant security breach involving one of its multi-signature wallets. Although the affected wallet was outside the secure Liminal Custody system, the incident has sparked serious concerns about the security of funds and the broader crypto landscape. The breach led to a considerable loss and has prompted a wave of apprehension among users regarding the safety of their investments on the exchange.
In response to the incident, Liminal Custody has confirmed that their platform remains intact and unaffected by the breach. However, this event highlights a glaring need for enhanced regulatory measures in the blockchain and cryptocurrency sectors. The situation underscores the importance of implementing rigorous security protocols for exchanges and custodians, ensuring robust insurance for custodial funds to mitigate the impact of potential hacks, and fostering market stability to build trust and encourage innovation.
WITH LAW's Writ:
The WazirX breach serves as a wake-up call for the crypto industry, emphasizing the need for comprehensive regulatory frameworks to protect investors and safeguard the integrity of digital assets. As the crypto market continues to evolve, stronger regulations will be crucial in addressing security vulnerabilities and fostering a secure and resilient environment for both exchanges and their users.
Indian Telecom Act Sparks Debate: Will Blockchain Become the New Frontier for Privacy?
The recently enacted Indian Telecom Act has ignited a heated debate over privacy and governmental control, with some hailing it as a modernization of outdated regulations, while others express deep concerns. Critics argue that the act's provisions, which include the potential for intercepting communications, could undermine privacy and secure communications. Namrata Maheshwari of Access Now has criticized the act, asserting that true national security cannot exist without safeguarding privacy. Meanwhile, Tim Kravchunovsky, CEO of Chirp, suggests that increased governmental oversight might drive people towards blockchain technologies that offer more secure, decentralized communication.
This tension between centralized control and decentralized solutions underscores the growing appeal of blockchain technology. As the Indian Telecom Act heightens concerns about privacy, blockchain’s promise of secure, decentralized communication becomes increasingly attractive. The act may accelerate interest in blockchain alternatives, despite challenges such as adoption, regulatory barriers, and scalability issues. This development could spur innovation in decentralized infrastructure, potentially leading to more robust solutions that prioritize user privacy over governmental control.
WITH LAW's Writ:
In the face of tighter regulatory scrutiny on centralized systems, blockchain technology could emerge as a significant player in secure communication. As privacy concerns mount, the demand for decentralized solutions might drive advancements in blockchain development, fostering new opportunities for secure and private digital interactions.
India’s Upcoming Crypto Policy: A Game-Changer for Blockchain Innovation?
India is on the brink of unveiling a new discussion paper on cryptocurrency policy, slated for release before September. Economic Affairs Secretary Ajay Seth recently announced this development, which is set to reshape the regulatory landscape for digital assets in the country. The paper will seek feedback from various stakeholders on proposed regulations that aim to address more than just anti-money laundering (AML) and counter-terrorism financing (CTF) concerns. This comprehensive approach will involve multiple government agencies, including the RBI and SEBI, and aligns with international guidelines set by the IMF and FSB.
This new policy initiative is poised to bring much-needed clarity to the blockchain and crypto industry, potentially spurring innovation and growth. By engaging stakeholders in the regulatory process, India is fostering a collaborative environment that addresses diverse needs and concerns. The alignment with global standards promises a balanced and well-integrated approach to crypto regulation, which could enhance cross-border cooperation and market stability.
WITH LAW's Writ:
The anticipated regulations could significantly impact the blockchain sector by reducing uncertainty and encouraging more projects and startups to emerge in India. A robust policy framework might also address critical issues such as scalability and security, thereby boosting investor confidence and attracting additional capital to the Indian blockchain ecosystem. As the global community watches, India’s approach could set a new benchmark for cryptocurrency regulation and innovation worldwide.
领英推荐
Crypto Industry Left in the Lurch: Budget Fails to Address Key Tax Issues
The recent Budget announcement by Finance Minister Nirmala Sitharaman has left the crypto industry disappointed, as it fell short of addressing the critical issue of reducing the Tax Deducted at Source (TDS) on virtual digital assets (VDAs). Despite strong advocacy from crypto exchanges and industry leaders for a reduction from 1% to 0.01%, the Budget did not tackle this key concern. The persistent high tax rate of 30% on VDA gains and the inability to offset losses continue to be major obstacles for the sector. Dilip Chenoy, Chairperson of the Bharat Web3 Association, highlighted the urgent need for a revised taxation framework to support the industry's growth and development.
The absence of a more supportive tax regime impacts not only the growth of the crypto industry but also the broader adoption of blockchain technology in India. A clear and rationalized regulatory framework is essential for fostering innovation and attracting investment in the blockchain sector. The current tax structure, which imposes high rates and restricts loss set-offs, creates significant barriers to progress and may hinder India's position as a leader in the global digital economy.
WITH LAW's Writ:
To maintain momentum and support technological advancement, policymakers need to address these issues promptly. A more favorable taxation policy would enhance the investment climate, stimulate blockchain development, and drive economic growth. As the crypto community continues to push for change, the government’s response will be crucial in shaping the future of digital assets and blockchain technology in India.
South Korea's New Crypto Supervisory Fees: A Financial Burden or a Regulatory Leap?
South Korea has unveiled a new regulatory measure imposing supervisory fees on cryptocurrency exchanges as part of the Virtual Asset User Protection Act. Starting next year, prominent exchanges like Upbit, Bithumb, and Coinone will face substantial fees estimated at around 300 million won ($219,992) to cover inspections by the Financial Supervisory Service (FSS). This development comes as a result of the revised Enforcement Decree under the Financial Services Commission Act, marking a significant step in the country's regulatory evolution.
The new fees are calculated based on the exchanges' operating income, with Upbit facing a fee of approximately 272 million won and Coinone about 6.03 million won. Notably, Korbit, with operating revenue below 3 billion won, is exempt from these fees, highlighting the financial strain on smaller exchanges. This measure is part of a broader effort to enhance oversight and compliance within South Korea's crypto industry, reflecting the government's push for stricter regulatory controls.
WITH LAW's Writ:
The swift introduction of these fees signals a strong regulatory stance and may impact the sustainability of smaller exchanges struggling with financial pressures. This move could set a precedent for other countries considering similar frameworks, especially amid rising global scrutiny of cryptocurrency markets. The emphasis on increased oversight underscores the growing importance of regulatory measures in the evolving landscape of digital assets.
The Bahamas Enhances Crypto Oversight with DARE 2024: A New Era for Digital Asset Regulation
The Bahamas Parliament has enacted the Digital Assets and Registered Exchanges Act, 2024 (DARE 2024), marking a significant overhaul in the regulation of digital assets and cryptocurrency markets. This legislative move comes in response to the collapse of the FTX exchange, which had its base in The Bahamas, highlighting the need for more robust regulatory measures. DARE 2024 introduces a comprehensive framework to govern a broad spectrum of digital asset activities, including advisory services, derivatives, and staking.
Under the new law, digital asset exchanges are required to meet stringent investor and consumer protection standards, with enhanced systems and controls. The act also mandates rigorous disclosure and financial reporting, extending oversight to custody services and creating a framework for stablecoins—while prohibiting algorithmic stablecoins. This approach reflects a global trend towards tighter regulation to address risks and ensure market stability.
WITH LAW's Writ:
DARE 2024 places the Bahamas alongside other jurisdictions like the EU and the US in advancing regulatory frameworks for the crypto sector. These developments underscore a unified global effort to safeguard investors, curb market abuses, and sustain the digital asset ecosystem. As countries observe the Bahamas' new regulations, DARE 2024 could serve as a model for shaping future regulatory approaches in the growing field of digital assets.
France Leads the Charge: Early Adoption of MiCA Regulations Signals New Era for Crypto and Blockchain
France is making strides in cryptocurrency regulation by accepting applications for Crypto Asset Service Providers (CASPs) ahead of the forthcoming Markets in Crypto-Assets (MiCA) regulations. This proactive move by the Autorité des marchés financiers (AMF) comes six months before MiCA's official implementation, setting the stage for stricter and more uniform regulatory standards across the European Union. The new framework will replace France’s existing PACTE regime and will enforce rigorous rules for Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT), and cybersecurity.
Under MiCA, firms must secure CASP authorization by July 1, 2026, to operate across the EU. This authorization will provide a single license to operate throughout all EU member states, facilitating smoother cross-border operations. Prominent crypto entities such as Circle and Cardano have already begun aligning with MiCA requirements, ensuring a seamless transition to the new regulatory environment.
WITH LAW's Writ:
The early adoption of CASP applications in France is a significant development for the crypto and blockchain sectors. It reflects a broader European movement toward harmonized regulations that enhance investor protection, market integrity, and financial stability. By reducing regulatory fragmentation and introducing the European “passport” system, MiCA is set to foster innovation and expansion within the EU’s digital asset market, marking a transformative shift in the global regulatory landscape for cryptocurrencies.
Closing Insights : Key Blockchain Developments
As the global regulatory landscape for cryptocurrency continues to evolve, recent developments underscore the critical need for comprehensive oversight and robust legal frameworks. From Greece setting deadlines for crypto taxation to the WazirX hack highlighting regulatory gaps, it's evident that the crypto industry is at a crossroads. The Indian Telecom Act's implications for blockchain privacy and the country's upcoming crypto policy could be pivotal for innovation, while South Korea's new supervisory fees and the Bahamas' DARE 2024 signal an increasing financial and regulatory burden. France's early adoption of MiCA regulations and the landmark U.S. case deeming price manipulation as securities fraud further illustrate the global shift towards tighter controls. However, the crypto industry's disappointment over the lack of tax clarity in India's budget reflects ongoing uncertainties. These developments collectively point towards a future where the balance between fostering innovation and ensuring security and compliance will be more crucial than ever. The next few years will likely determine the direction of blockchain and crypto industries, as nations grapple with the challenges and opportunities of regulating this rapidly evolving sector.
?News WITH LAW: Your Starting?Point
Welcome to your weekly guide through the ever-changing landscape of law and beyond. At News WITH LAW, we’re committed to delivering the most relevant updates, trends, and expert insights across the sectors we specialize in—be it Environmental, Social, and Governance (ESG), corporate law, technology, finance, healthcare, and more. Each edition is crafted to empower you with the knowledge and inspiration you need to excel, no matter where you stand on your professional journey. Thank you for making News WITH LAW your trusted companion as we navigate these dynamic fields?together.
Disclaimer
The information provided in this newsletter is for general informational purposes only and is not intended to be a substitute for professional advice, whether legal, financial, or otherwise. While we strive to ensure the accuracy and reliability of the information presented, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the newsletter or the information contained therein. Any reliance you place on such information is therefore strictly at your own risk.
In no event will With Law be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from the use of this newsletter. The inclusion of any links or references does not necessarily imply a recommendation or endorsement of the views expressed within them.
We encourage you to consult with appropriate professionals before making any decisions based on the information provided in this newsletter. Your use of the information contained herein is at your own risk, and we assume no responsibility or liability for any errors or omissions in the content of this?newsletter.