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| Hey Insider! Regulators all around the world have ramped up their efforts to enhance consumer protection in the crypto market following a prolonged crisis in the industry. Today's issue covers South Korea's new standards mandating firms to report their crypto holdings, The U.S. Senate Committee on Finance's letter seeking help from the crypto industry for tax guidance, Russia's digital ruble bill passed by the State Duma, and more. I hope you enjoy your reading! Doğa
p/dogayurduneri | |
| 1 | | The U.S. Senate Committee on Finance has written a letter seeking comments from the crypto industry to better understand how Congress should address tax challenges and opportunities posed by digital assets. The letter was prepared by the committee's chairman, Ron Wyden, and a ranking member, Mike Crapo. More: - In the letter, Wyden and Crapo have directed questions to the industry participants on nine subjects.
- The issues at the center of questions include loans of digital assets, wash sales, staking, and mining.
- The committee will continue to collect answers by Sept. 8.
- In April, an official from the Internal Revenue Service (IRS), the U.S. tax authority, said they planned to start implementing a new operating plan for dealing with cryptocurrencies within 12 months.
Zoom Out: - Over the past months, U.S. President Joe Biden urged authorities several times to remove tax loopholes that only help wealthy crypto investors.
- Biden's fiscal 2024 budget proposal, revealed in March, also suggested doubling the capital gains tax rate for crypto investors and banning crypto wash sales.
- The White House published a blog post in May, reiterating the U.S. government's plans to impose a 30% federal tax for electricity usage from all digital asset mining.
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| 2 | | 
What the numbers say: The popular job review platform Glassdoor's data compiled by TrueUp has shown that the number of companies conducting mass layoffs in the crypto and Web3 industry peaked in January compared to the other months over the past year. The upward trend started in November 2022 before seeing a slowdown in April. After March 2023, when the leading cryptocurrencies, including Bitcoin (BTC), experienced a price recovery, the industry was able to breathe a bit more easily in terms of employee circulation. Relevance: The beginning of the increase in mass layoffs coincided with the bankruptcy of the previously third-largest crypto exchange FTX in November 2022. The collapse paved the way for another prolonged crypto winter, which followed the one after the collapse of the multi-billion dollar Terra ecosystem. The market downturn triggered by these high-profile collapses forced many crypto-related firms to go downsize to be able to manage the crisis. Brands that should care: The crypto-related companies having to conduct mass layoffs amid the crypto winter include Coinbase, Crypto.com, Huobi, Chainalysis, Kraken, Gemini, and Anchorage Digital. | | | |
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| 3 | | The European Banking Authority (EBA), the banking watchdog of the European Union (EU), has urged stablecoin issuers to voluntarily adopt the EU's region-wide crypto regulations, the Markets in Crypto Assets (MiCA), before the legislation comes into force. Under the schedule set by the EU, the firms have 12 to 18 months to comply with new rules. More: - The EBA said stablecoin issuers should have sound governance, effective risk management, measures for consumer protection, and proper arrangements for handling redemptions.
- The watchdog also pointed out that early preparation would help avoid sharp and disruptive business model changes at a later stage.
- The long-awaited MiCA was finally approved by the lawmakers at the European Parliament, the legislative body of the EU, with a final vote in April after three years of development, and signed into law in June.
- The regulation mandates stablecoin issuers to keep sufficient local reserves and be subject to trading limits on tokens whose value is not pegged to the euro.
- Under the new legislation, the issuers will also have to obtain a license in at least one of the 27 member states by June 2024, registering with a national financial regulator.
- The law's provisions related to stablecoins will come into effect as of July 2024, while other aspects regarding the crypto asset service providers will enter into force as of January 2025.
Zoom Out: - A stablecoin is a type of cryptocurrency whose value is pegged to another reference asset, mostly a fiat currency.
- These assets are generally used by customers to trade with different cryptocurrencies without converting their funds back into fiat currencies.
- Circle, Paxos, and Tether are among the most renowned stablecoin issuers.
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| 4 | | The largest U.S. crypto exchange Coinbase has announced that it added a new messaging feature for Ethereum wallets to its Coinbase Wallet service. The feature will allow any two Ethereum addresses to send direct messages to each other. More: - The messaging feature will utilize a communications protocol dubbed XMTP.
- Coinbase said the feature supports encrypted messaging, which means no one will see the messages other than the intended recipient.
- Besides, the messages will not be recorded on a blockchain, though they are sent between crypto wallets, differently from asset transfers.
- The company's director of product management, Siddharth Coelho-Prabhu, pointed out that the integration would give users the freedom to fully own their messages and transactions through their personal, on-chain identity.
Zoom Out: - Coinbase Wallet currently has 1.3 million users worldwide.
- TON Foundation, the community behind The Open Network (TON), also recently launched an on-chain messaging feature that encrypts messages end to end, allowing TON users to send private messages to each other.
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| 5 | | The lower house of the Federal Assembly of Russia, the State Duma, has passed the digital ruble bill in the third reading, making the legislation one step closer to becoming law. The bill mainly aims to establish a legal framework for the country's central bank digital currency (CBDC) ecosystem. More: - The legislation was first introduced to the State Duma in December last year and passed through its first reading in March.
- The lower house made the last changes to the bill at the end of June.
- The bill also determines the legal definitions of several terms, such as platform, participants, and users.
- The framework authorizes the Bank of Russia (BoR), the country's central bank, to operate and oversee the infrastructure of the digital ruble.
- The BoR sees the CBDC as a payment and transfer method rather than an investment instrument, which means that the CBDC users in Russia will not be able to open savings accounts.
- The bank also plans to make payments and transfers free for individual customers and charge corporate clients 0.3% of the payment amount.
- The bill will now be sent to the Federation Council, the assembly's upper chamber, and will be signed into law by President Vladimir Putin if passed.
Zoom Out: - In March, the BoR had to postpone the launch of the pilot of its CBDC, expected to start on April 1, since the related legislation had not been ready yet.
- A recent report from the Russia-based Interfax news agency has pointed out that the country will start testing the digital ruble with consumers in August.
- In a recent interview, the BoR's deputy chairman, Olga Skorobogatova, also said they expect the CBDC to move to the mass rollout for all Russian citizens by 2027.
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| 6 | | South Korea's financial market regulator, the Financial Services Commission (FSC), has announced new accounting standards that mandate domestic companies issuing or holding cryptocurrencies to report their virtual assets in their financial statements. The new standards will come into force as of January 2024. More: - Under the new guidelines, cryptocurrency issuers will have to provide detailed information about their holdings, including the amount and characteristics of the tokens, business models, internal accounting policies, and the profits from the sale of these crypto assets.
- South Korean companies owning crypto for investment purposes will also need to disclose information about their tokens' classification, book value, and market value.
- The FSC stated that the new rules aim to enhance accounting transparency in the digital asset market in the country.
- The new guidelines were approved by the Korean Accounting Standards Board on July 7.
Zoom Out: - South Korea's National Assembly also passed legislation dubbed the Virtual Assets Act on June 30 to better protect crypto investors.
- The act authorized the FSC and the Bank of Korea, South Korea's central bank, to supervise the crypto service providers and virtual asset custodians.
- The bill also gave the authorities the warrant to enforce penalties in case of a potential violation.
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- Singaporean government-owned investment firm Temasek Holdings' chief investment officer, Rohit Sipahimalani, has stated that they currently have no interest in investing in the crypto companies, citing regulatory uncertainty.
- Cathie Wood-led investment management firm ARK sold 135,152 shares of the crypto exchange Coinbase (COIN).
- Japanese banking giant Sumitomo Mitsui Financial Group has launched a new digital banking service in the U.S.
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 | Staff Writer | | Doga is a tech and science editor who has been writing news for nearly 10 years. She worked for leading tech platforms and mainstrem media channels as an editor and presenter throughout his career. Then, she carried her know-how to more than one platform. She is a part-time cat lover and binge-watcher, and also fond of science, space, and emerging tech. She always has a story to tell. She is a bit addict to the laughter and -unfortunately- the '90s culture. | | This newsletter was edited by Aaron Crutchfield | |
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