Crypto regulation in the world: weekly digest #96


In the U.S. Senate have passed a bipartisan bill proposal aims to cancel SAB 121, a controversial SEC accounting standard for crypto custodians. The bill, known as the Uniform Treatment of Custodial Assets Act, seeks to rescind the SEC's guidelines that force banks to account for custodied crypto assets differently than other assets. This proposal is supported by lawmakers such as Republicans Mike Flood and French Hill, along with Democrats Ritchie Torres and Wiley Nickel. The bill intends to ensure that assets custodied by banks, credit unions, and trusts are kept off-balance sheet, aligning with established industry practices and aiming to support the digital assets industry in the United States.

SAB 121, or Staff Accounting Bulletin No. 121, is an SEC accounting standard that addresses how companies should account for custodial services of crypto assets. It requires companies to record a liability and corresponding asset on their balance sheets at fair value when holding cryptocurrencies for clients. The controversy surrounding SAB 121 stems from the implications it has on financial institutions, particularly banks, as it could force them to maintain additional capital to cover the risks associated with holding crypto assets. Critics argue that the SEC did not follow proper procedures in issuing this guidance and that it should have been subject to a more formal rulemaking process involving public notice and comment periods.

The cancellation of SAB 121 would remove the requirement for companies to record crypto assets on their balance sheets, potentially allowing banks to offer digital asset custodial services at scale without the burden of additional capital and liquidity costs imposed by the standard. This change could enhance competition in the market, enable U.S. banks to provide custodial solutions for digital assets, and align with industry practices that treat custody assets off-balance sheet. From the other side, the cancellation of this regulation may lead to a lack of investor’s protection and transparency in the crypto industry.

Earlier we wrote about the adoption of rules in the US to account for cryptocurrency on the balance sheets of companies.


Canada has announced its plans to join the Crypto-Asset Reporting Framework (CARF), a new global tax transparency framework developed by the OECD that provides for the automatic exchange of tax information on transactions in crypto-assets. The CARF consists of rules and commentary that can be transposed into domestic law to collect information from crypto-asset service providers. By joining CARF, Canada will increase global tax transparency with respect to crypto-assets and address tax compliance risks in this sector.

CARF aims to prevent the use of virtual assets for tax evasion and enhance tax transparency in the crypto sector by requiring businesses to collect information on users of relevant crypto-assets and report this data annually to tax authorities. The framework covers transactions involving exchanges between crypto-assets and fiat currencies, different forms of crypto-assets, and transfers of crypto-assets exceeding certain thresholds. CARF will apply to businesses, individuals, and entities providing exchange services for crypto-assets, ensuring compliance with tax reporting obligations and facilitating the automatic exchange of tax-related information between jurisdictions where taxpayers reside.


Taiwan has proposed a bill that sets a two-year jail term for Virtual Asset Service Providers (VASPs) who are non-compliant. This draft bill aims to regulate virtual currency service firms, requiring them to have their registered office, management, and place of business located in Estonia. The bill also tightens regulations on virtual asset service firms, subjecting them to supervision by the Financial Supervision Authority, which includes requirements such as minimum capital standards, IT standards, audits, and reporting.

Earlier Taiwan has adopted a Virtual Asset Management Ordinance bill, that aims to regulate digital assets by defining virtual assets, setting operational standards for asset operators, ensuring customer protection, and mandating membership in industry associations and regulatory permissions. The legislation also requires VASPs to separate customer assets from business funds and commission periodic reports from accountants regarding their operations and assets oversight.

Additionally, the bill emphasizes the need for regulatory oversight and collaboration between the virtual asset service provider industry and the Financial Supervisory Commission (FSC) to define regulatory operations.

News from other countries:

  • Alexey Pertsev, the developer behind the crypto-mixer Tornado Cash, was found guilty of money laundering by a Dutch court. He was sentenced to five years and four months in prison for laundering billions of dollars in illicit assets through the Tornado Cash platform. Pertsev's conviction marks a significant moment in the regulation of decentralized finance, raising questions about the balance between privacy tools and preventing criminal activities in the crypto space. The Tornado Cash itself has been marked as an SDN entity since August, 2022.
The TokenScope Team
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