Legislation

Australia to Regulate Crypto Sector as Part of Payments Reform

08/12/2021 by Idelto Editor

The government of Australia is preparing to comprehensively regulate the activities of cryptocurrency exchanges and custodians. The push is part of a major overhaul, aimed at preserving the country’s sovereignty over its payments system, which will also affect providers like Apple and Google.

Payment Laws in Australia to Cover Crypto Business and Big Tech

Authorities in Australia are gearing up to update the nation’s legislation governing payments in the largest reform of the industry in over two decades. The changes will expand the regulatory framework to encompass new payment processors in the online space including those dealing with cryptocurrencies.

In 2022, the government will begin consultations on the establishment of a licensing framework for crypto exchanges and the regulation of platforms holding digital assets on behalf of clients, Reuters reported. Canberra also wants to explore the feasibility of a central bank digital currency (CBDC) issued by the Reserve Bank of Australia.

With a daily number now reaching 55 million, non-cash payments, including crypto transactions, have spiked during the Covid-19 pandemic as many Australians have turned to online options. Close to half of them are using their phones to make payments while in 2021 those transacting in crypto have increased by 63% over the previous year.

Australia’s plan to broaden its payment regulations also aims to cover online transaction processors such as Apple and Google as well as buy-now-pay-later providers like Afterpay. The goal is to put an end to their unsupervised operations in the country. Speaking on the need for the amendments, Federal Treasurer Josh Frydenberg warned:

If we do not reform the current framework, it will be Silicon Valley that determines the future of our payment system. Australia must retain its sovereignty over our payment system.

Google and Apple have so far refrained from commenting on the announcement but a spokesperson for Afterpay has been quoted as stating that the company supports “any approach that takes into account consumer benefits from the innovation and competition Afterpay has brought to the market.” The platform has agreed to a buyout from Twitter founder Jack Dorsey’s payments firm Square, Reuters noted.

Australia’s move comes at a time when a number of other major economies are taking steps to determine their regulatory policies regarding financial innovations, including cryptocurrencies. Unlike China and India, for example, Australia is preparing to take a more inclusive approach similar to that of the United States, the report suggests.

Do you think the Australian government will adopt crypto-friendly regulations? Share your expectations in the comments section below.

Finance Committee Approves Legislation Delaying Crypto Tax in South Korea

30/11/2021 by Idelto Editor

Changes meant to postpone the introduction of a tax on virtual assets such as cryptocurrencies in South Korea have been approved by an important parliamentary committee. The draft legislation seeks to delay Seoul’s plan to impose a 20-percent levy on gains from crypto transactions.

Ahead of Election, Major Parties Support Tax Break for Crypto Investors in South Korea

South Korean parliament is taking steps to suspend a planned tax on profits from digital asset investments for another year. The move has been supported by the ruling Democratic Party, despite disagreements with the government itself, as well as the leading opposition People Power Party.

The amendments, which also envisage the increase of an exemption on capital gains tax for real estate sales amid rising property prices, are viewed by Korean politicians as a popular proposition ahead of the upcoming presidential election in March next year, the Korea Joongang Daily noted in a report.

The Strategy and Finance Committee at the National Assembly passed the changes to the respective provisions during a meeting on Tuesday. The voting followed the approval of the revisions by its subcommittee on taxation during a session on Monday.

Authorities Need More Time to Set Up Taxation System for Crypto Assets

The two Korean parties have agreed to postpone the adoption of a 20% tax on annual profits from virtual asset investments exceeding 2.5 million won ($2,102). The government planned to introduce the tax on Jan. 1, 2022, but the recent voting indicates the tax is likely to be suspended until 2023.

The Democratic Party has been pushing for the delay as investments in cryptocurrencies have become quite popular with young voters who also find it very hard to save enough money for a home amid skyrocketing property prices. The party also hopes that the raising of the capital gains tax exemption for single residence owners who sell from a price of 900 million to 1.2 billion won ($1 million), will help to increase the availability of homes on the market.

DP representatives have argued that Korean tax authorities need more time to establish a proper tax system for virtual asset investing. However, Finance Minister Hong Nam-ki opposed the delay, stating that “The government is ready to immediately tax virtual assets.” He nevertheless noted that the executive power will comply with any decision by the parliament, which is expected to vote on the amendments in early December.

Do you think South Korean lawmakers will support the proposed amendments concerning crypto taxation? Tell us in the comments section below.

Bank of Russia Pushes to Introduce Liability for Illegal Use of Digital Assets

24/11/2021 by Idelto Editor

The monetary authority in Moscow, the Bank of Russia, wants those who use cryptocurrencies against the law to be held accountable. The financial regulator has proposed the introduction of legal liability for some operations with digital assets which it considers illegal.

Central Bank of Russia Aims to Prevent Circulation of Decentralized Currencies

Cryptocurrencies in the Russian Federation, as well as related activities, remain only partially regulated, mainly through the law “On Digital Financial Assets,” which went into force at the beginning of this year. One of the aspects that is still unclear is whether digital coins can be used to pay for goods and services.

The Central Bank of Russia (CBR) has remained consistently opposed to allowing payments with bitcoin and the like. The authority claims these are all “money surrogates” that are banned under current Russian legislation which recognizes the ruble as the only legal tender in the country that spans 11 time zones.

The CBR now wants to introduce legal liability for what it views as “illegal circulation of digital financial assets.” Remarkably, the push is part of its plans for the “creation of an enabling environment for the introduction of new technologies and support for innovation in the financial market” – two of the bank’s key “strategic directions” under the banner of “promoting digitalization.”

The proposal has found its place in the Bank of Russia’s program document titled “Main Directions for Financial Market Development of the Russian Federation” for the period until 2024. The project has been recently approved by its Board of Directors for submission with the State Duma, the lower house of the Federal Assembly.

In order to develop innovative financial instruments, the CBR says, a number of federal laws aimed at comprehensive legal regulation for digital financial assets and utilitarian digital rights must be adopted. Another aspect that needs to be addressed, according to the central bank, is the taxation of transactions involving these rights and assets, a procedure for which should be established.

Bank of Russia further notes that efforts to launch a digital version of the national currency are ongoing. The introduction of the ruble’s third form, after cash and bank money, requires a string of legislative changes, the monetary authority points out. Earlier in November, the head of the parliamentary Financial Market Committee, Anatoly Aksakov, indicated that deputies at the Duma prepare to amend 13 Russian laws and codes to accommodate the CBDC.

Meanwhile, members of the house have voiced concerns that the digital ruble may pose risks to the banking sector and information security. At the same time, Bank of Russia’s Chair Elvira Nabiullina has recently stated that the new currency is what the Russians need as it will provide them with an alternative to cryptocurrencies and stablecoins while enabling cheap and reliable payments.

The CBR started contemplating a CBDC in 2018 and decided to explore the possibility of issuing one last year. A consultation paper was published in October 2020 and in April 2021, the authority released a digital ruble concept. In June, this year, the authority formed a pilot group with over a dozen banks. It plans to complete the platform’s prototype in December and begin trials in January 2022.

Do you think the Bank of Russia will convince lawmakers to introduce legal liability for the illegal use of cryptocurrencies? Let us know in the comments section below.

Russia’s Prosecutor General Wants Cryptocurrency Recognized as Property Under Criminal Law

18/11/2021 by Idelto Editor

The Prosecutor General’s Office of Russia has proposed to define cryptocurrency as property in the country’s Criminal Code. Decentralized digital money has already been qualified as such in the provisions of several other laws although various aspects of cryptocurrencies remain unregulated.

Prosecutors in Russia Draft Legislation Granting Cryptocurrency Property Status

The Prosecutor General’s Office of the Russian Federation has prepared a draft law to recognize cryptocurrency and other virtual assets as property. The legal definition will be used in court proceedings within the framework of the Criminal Code, Russia’s Prosecutor General Igor Krasnov explained in the State Duma, the lower house of parliament.

Krasnov also expressed concerns over the growing use of modern financial technologies to commit crimes which, in his view, is facilitated by existing gaps in the legal regulation of this particular field. Quoted by the Interfax news agency, he further elaborated:

The status of online platforms that provide an opportunity to buy and sell cryptocurrency anonymously has not been determined yet, and the issue of classifying virtual assets as property for the purposes of criminal proceedings has not been resolved.

The Prosecutor General unveiled that his department has already taken the initiative and drafted a bill that would regulate the matter, adding that he would be grateful if lawmakers support it. So far, digital currencies such as bitcoin have been recognized as property under several other Russian acts, including the laws on bankruptcy and on enforcement proceedings, within the anti-money laundering legislation, as well as the anti-corruption law.

In December last year, a bill aiming to define digital currency as property for taxation purposes was submitted to the Duma. The draft law was supposed to introduce a legal obligation for Russian citizens to report cryptocurrency holdings on their tax returns but the legislation has not yet been adopted, the report notes.

Cryptocurrencies remain only partially regulated in the Russian Federation, mainly through the law “On Digital Financial Assets” which went into force in January of this year. While it introduced terms and rules pertaining to cryptocurrency and related activities like “digital currency issuance,” it doesn’t deal with other areas such as crypto mining or payments, for example.

While the idea of recognizing mining as an entrepreneurial activity has been gaining support among officials in Moscow, Bank of Russia remains firmly opposed to allowing the free circulation of cryptocurrencies in the Russian economy. The head of the monetary authority, Elvira Nabiullina, recently stated that the digital ruble, which is currently under development, is what Russian citizens actually need while again rejecting cryptocurrencies that, as she insisted, pose risks to financial stability.

Do you think Russian deputies will back the Prosecutor General’s proposal to define cryptocurrency as property under the country’s Criminal Code? Tell us in the comments section below.

Why U.S. Legislators Will Start Creating “Bitcoin-Friendly” States

12/11/2021 by Idelto Editor

Discussing recent conversations with Senator Ted Cruz and potential legislation to create “Bitcoin-friendly” U.S. states.

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This week on “Bitcoin Bottom Line,” co-hosts “Bitcoin Ambassador” C.J. Wilson and “Chart Master” Steven McClurg discuss the exciting, active times in the Bitcoin space. Don’t miss the video version of this episode.

Wilson shared a behind-the-curtain peek into his recent meetings with Senator Ted Cruz and other key political figures about Bitcoin legislation.

Wilson shared that, “There are a lot of things that are happening between the Texas Blockchain Association and the values of independence found in Texan Bitcoiners.”

In his meeting with Senator Cruz’s office, Wilson heard about their efforts to push bitcoin as a currency to be used during small cash transactions, which parallels the original impetus for bitcoin to be used in everyday expenses. They have ideas to implement this through a program on vending machines called “Accept.”

“As more people are dollar-cost-averaging into bitcoin, it proves to be a better and better asset for everybody involved,” Wilson shared.

McClurg shared his tendencies to HODL bitcoin, while also seeking out ways to spend it in order to promote the ecosystem. He went on to say that “bitcoin is useful if people are actually using it for transactions,” drawing the idea from Satoshi’s white paper, entitled “Bitcoin: A Peer-to-Peer Electronic Cash System.”

Wilson continued to share his experience in D.C., expressing his predictions that states are going to start taking advantage of building their own legislation to become “pro-Bitcoin states.”

Bringing it back to a few years ago, McClurg explained how “Wyoming was square one for states creating their own legislation and building an ecosystem, and Senator Lummis was at the forefront of that all along.”

“We have about six or seven critical years of these election cycles to make sure we don’t have an uneducated senator or committee making rules that hamper American prosperity,” Wilson stated.

In the midst of lacking financial literacy education, Wilson also expressed that “Bitcoin is an anti-default technology since it’s such a good form of capital, and one can sell if they need to, generally for more than they bought it for if they’ve held on to it for long enough. This could bail someone out of a fiscal problem.”

Listen to the full episode to hear more about how Bitcoin is benefitting the country, and what political figures are doing about it.