CryptoLaw Newsletter #33

50 jurisdictions have crypto ban, UK lawmakers form pro-crypto lobbying group, US CFTC DeFi enforcement, DapperLabs lobbying registered in US, EU regulator invites feedback on DLT securities trading

Hello everyone,

A lot has happend over the holiday period: we give you a (quite elaborate) summary below. Next week, we’ll continue with the DeFi interview series. I’m working on a similar interview series on DAOs and will keep you posted. But first, the CryptoLaw news higlights:

Digital assets

• Global – Over 50 jurisdictions either have an absolute or implicit ban on crypto, according to a report from the US library of Congress. Absolute bans are in place in Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh and China. 103 jurisdictions now apply anti-money laundering (AML/CFT) laws on crypto-asset transactions. (Decrypt)

• Crypto mining – Iran, Kosovo, Kazakhstan, Thailand and the US - Crypto mining was banned again in Iran as 2021 drew to a close, to avoid blackouts. It was the second time that year that (authorized) crypto mining centers were shut down. (BNNBloomberg) Kosovo also halted crypto mining amid a power crisis and even seized mining equipment (Cointelegraph). Meanwhile in Kazakhstan bitcoin mining tumbled as the government shut down the internet during the recent demonstrations in the country(Cointelegraph), although hashing power has since largely been restored. In Thailand, crypto mining reportedly boomed due to the crypto crackdown in China. (Cointelegraph) US Congress has scheduled another crypto oversight hearing, this time about the environmental impact of crypto mining. (Coindesk)

• Thailand – Crypto traders face a 15% capital gains tax. (Coindesk)

• Australia – The Australian Securities and Investments Commission (ASIC) infiltrated crypto pump & dump groups on Telegram. (Cointelegraph)

• Canada, Bahrain, Turkey – Binance received an in-principle license in Bahrain as a crypto-asset service provider. It also registered an entity with the Canadian AML/CFT regulator. Less good news for Binance in Turkey, where the crypto exchange was hit with an 8 million Turkish lira fine for non-compliance with anti-money laundering rules. (Cointelegraph and Cointelegraph)

• Turkey – The draft crypto law is ready to be sent to Parliament (Decrypt)

• US – Lawmakersin the US also plan to introduce a comprehensive crypto bill this year. (Cointelegraph) More than 30 crypto-related bills were submitted in Congress last year. (Forbes)

• Paraguay – A bill regulating crypto has passed the Senate. (Cointelegraph)

• Singapore – 100 digital payments crypto firms saw their license application rejected. (Cointelegraph)

• Pakistan – The Federal Investigation Agency contacted Binance concerning an alleged scam that led to thousand of investors losing more than $100 million in total. (Coindesk). Citizens collectively hold 20 billion worth of crypto assets, claimed the head of a local crypto association. (Cointelegraph)

• Japan – A number of crypto companies are leaving Japan citing the country’s tax rules. (Coindesk)

• UK – Lawmakers reportedly formed a crypto advocacy group to push for crypto-friendly regulation. (FT) Police seized over £320 million worth of illicit bitcoin over the past 5 years. (Decrypt) The advertisement regulator banned two ads from crypto company Crypto.com. (Coindesk)

• US – The Securities and Exchange Commission (SEC) reached a settlement with tZERO, an ATS that also offers blockchain-based trading of securities. The company will incur imposed a US$ 800,000 fine for violating federal disclosure rules. (SEC) The SEC charged an ICO issuer and founder for defrauding investors. (SEC) A government report recommends tightening rules on crypto kiosks (ATMs), which it links to increased human and drug trafficking. (GOA) The New York Department of Financial Services (NYDFS) hired a new deputy superintendent of virtual currency. (Coindesk) A potential regulatory “onslaught“ is leading to dozens of hires, growing campaign contributions from crypto executives ahead of midterm elections, snapping up of lobbying firms and a build-up of industry associations, writes Bloomberg. DapperLabs, the Canadian NFT company, became the first NFT company to register lobbying activities with the US government (see below).

• EU – The European Securities and Markets Authority (ESMA) is calling for public feedback on DLT for securities trading and settlement.

DeFi

• US – The Commodities and Futures Trading Commission (CFTC) imposed a US$1.4 million fine on Polymarket, in what is seen as an important signpost for future DeFi enforcement cases for the agency. Polymarket will discontinue some of its prediction markets after the CFTC’s finding that it was offering unlawful options contracts. (CFTC and Coindesk)

• Canada – An arrest warrant has been issued for a teenager suspected of orchestrating a US$ 16 million hack against a DeFi platform. (Coindesk)

Stablecoins

• Crypto news outlet Coindesk joins a court case seeking access to the New York Attorney General’s documents on stablecoin Tether. (Coindesk)

• Regulatory risks in mainstream crypto make decentralized stablecoins an attractive alternative to DeFi investors, according to Cointelegraph.

CBDCs

• India – The Reserve Bank of India implements a basic CBDC version. (Coindesk)

• Thailand – The central bank will delay its CBDC test until late 2022. (Coindesk)

• Switzerland – The Swiss are on schedule to start using wrapped CBDC as from this month – all that is needed is a “policy decision”. (Coindesk)

• Mexico plans to issue its CBDC by 2024. (Coindesk)

• China – The digital renminbi will be offered to athletes during the 2022 Winter Olympics, as announced previously. Will foreign athletes take up the offer? (Bloomberg)

NFTs

• Lobbying – DapperLabs became the first NFT company to register lobbying activities with the US government. The Canada-based company is known for NFTs such as CryptoKitties and the NBA’s TopShot. (Cointelegraph)

• Smart contracts to fence off a “hostile takeover”? A collection of Pudgy Penguin NFTs is causing a stir: a potential investor suggested he was close to sealing a deal with the team that created the NFTs to acquire the NFT collection for 750 ETH. Upset Penguin owners are staging a coup: smart contracts on Ethereum that allow the Penguins to be wrapped before being traded, bypassing automatic fees on secondary sales that otherwise would have reverted to the original creators. It “illuminates the expectation in crypto of an ownerhsip society, one where people who have pruchased pieces of a project should not only have a say in its direction but share in the wealth it generates.” (The Defiant)

Thanks for reading!