Crypto regulation in the world: weekly digest #60
The U.S. Department of the Treasury and the Internal Revenue Service (IRS) released proposed regulations on sales and exchanges of digital assets by brokers on August 25. These regulations aim to clarify and adjust the rules regarding tax reporting of information by brokers, so that brokers for digital assets are subject to the same information reporting rules as brokers for securities and other financial instruments.
The key provisions of the proposed regulations include:
The proposed regulations would require digital asset trading platforms to report sales or exchanges of digital assets to the IRS and customers. This means that these platforms would need to provide information to the IRS about the transactions that occur on their platforms and ensure they have systems and processes in place to accurately track and report the necessary information.
The proposed regulations define brokers as digital asset trading platforms, digital asset payment processors, certain digital asset hosted wallet providers, and persons who regularly redeem digital assets they created or issued.
Brokers would be required to report gross proceeds on a newly developed Form 1099-DA and provide payee statements to customers for sales or exchanges of digital assets that take place on or after January 1, 2025.
The proposed regulations broadly define digital assets subject to information reporting, including stablecoins and non-fungible tokens (NFTs).
There are exclusions from barter exchange transactions: the proposed rules state that exchanges of digital assets for property or services are generally not reportable as barter exchange transactions. The proposed regulations are open for public comment and feedback until October 30, 2023.
Indian Prime Minister Narendra Modi has emphasized the need for global collaboration on formulating crypto regulations during the annual Group of 20 (G20) summit. As the president of the G20, India has taken up the task of advocating for a comprehensive global framework for regulating cryptocurrencies.
Despite its complex crypto regulatory environment, India has been advocating for a global crypto framework for some time. The country imposed a 30% tax on crypto gains in 2022, leading to a mass exodus of budding crypto companies and a sharp decline in crypto trading activity. The Reserve Bank of India (RBI) has also been advocating for a complete ban on cryptocurrencies in India, although it has launched its national CBDC.
The G20 countries are striving to build a policy consensus on crypto assets to inform better global regulation. India, which currently holds the G20 presidency, is hosting the group's first meeting of finance and central bank deputies. The implications of crypto assets for the economy, monetary policy, and the banking sector should be studied to inform this consensus.
During India's G20 presidency, the country expanded the crypto conversation beyond financial stability to consider its broader macroeconomic implications, especially for emerging markets and developing economies. The presidency also hosted enriching seminars and discussions, deepening insights into crypto assets. As a result, G20 nations, supported by the Financial Stability Board (FSB) and International Monetary Fund (IMF) under India's presidency, are set to bring into implementation perhaps the first global crypto regulations ahead of the Leaders' Summit in September.
The FATF Travel Rule became obligatory for crypto companies in the UK.
Russia has officially started its Digital Ruble (Russian CBDC) pilot involving 13 major country’s banks.
Ripple believes court should deny SEC request for appeal as the exceptional circumstances required for interlocutory appeal are absent.
SEC has delayed its decision on several Bitcoin exchange-traded fund (ETF) applications, including those from BlackRock, Fidelity, and Invesco. The new deadlines for the rulings are set between October 16 and October 19, 2023.
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