Crypto Industry Battles Regulators in Court: Law Decoded, 10-17 increased.
Perhaps one of the most compelling signs of the industry’s maturity is the growing amount of litigation in which crypto companies are fighting back against perceived regulatory abuses. Last week saw some great progress in that direction.
Digital asset manager Grayscale has filed its opening brief against the United States Securities Exchange Commission to challenge its decision to deny Grayscale’s application to convert the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin exchange-traded fund (ETF). According to Grayscale, the SEC must submit its letter by November 9.
A US-based crypto policy advocacy group, Coin Center has followed through on its intention to take the Treasury Department’s Office of Foreign Asset Control, or OFAC, to court for sanctioning cryptocurrency mixer Tornado Cash. Lawyers for Coin Center as well as crypto investor David Hoffman, an anonymous human rights activist known only as John Doe, and software developer Patrick O’Sullivan filed a joint complaint against OFAC, Treasury Secretary Janet Yellen and OFAC Director Andrea Gacki. The complaint claimed that sanctioning Tornado Cash was “unprecedented and unlawful”, in part due to privacy concerns over crypto transactions.
Meanwhile, Ripple CEO Brad Garlinghouse revealed that he expects the long-running battle between Ripple and the SEC to end in the first half of 2023. “Federal judges work at their own pace,” he said, before adding: “Optimistically, we talking about three to four months. Pessimistically, it could be longer than that.” The fintech chief said Ripple would consider a settlement with the SEC, provided XRP is not classified as a security.
MiCA goes through the European Parliament Committee
Members of the European Parliament committee adopted the key crypto framework, Markets in Crypto-Assets (MiCA), by 28 votes to one, with a final vote expected in a full session of the European Parliament soon. After the MiCA vote, members of the European Parliament overwhelmingly approved a provisional agreement on the Transfer of Funds Regulation, legislation that aims to have compliance standards for crypto-assets in an effort to crack down on money laundering. The two regulatory frameworks, if given final approval, would apply to member states with the European Union, but potentially serve as an example for global crypto lawmakers. After all procedures and checks, the crypto policy can come into effect from 2024 onwards.
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The OECD framework for combating international tax evasion using digital assets
The Organization for Economic Co-operation and Development (OECD) has published a framework to help tax authorities gain greater visibility into crypto transactions and the users behind them. The Crypto Tax Framework proposes the automatic exchange of information on crypto transactions between jurisdictions annually, given an increase in the number of unregulated exchanges and wallet providers. If approved, the framework is likely to facilitate information sharing about crypto transactions among the OECD’s 38 member countries — a list that includes the United States, Japan, South Korea and many nations in Europe.
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Portugal proposes 28% tax on crypto profits
Long considered a tax haven for cryptocurrencies, Portugal’s government has proposed a 28% tax on capital gains from cryptocurrencies held for less than a year. The government’s 2023 state budget document contained a brief section addressing the taxation of cryptocurrencies, which to date has been untouched by the Portuguese tax authorities, given that digital assets were not recognized as legal tender.
A proposed income tax from operations involving cryptocurrencies through activities such as mining, trading and capital gains was put forward in the 444-page document. The state budget also proposes a 4% fee for free transfers of cryptocurrencies in cases of inheritance, as well as stamp duties on commissions charged by intermediaries involved in the cryptocurrency sector.
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