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Congressman Ted Budd Brings Back the Crypto Tax Bill

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Ted Budd

Ted Budd

North Carolina Congressman Ted Budd has introduced a tax bill in the United States House of Representatives seeking to refine cryptocurrencies’ treatment by the Internal Revenue Services. The bill will amend the Code allowing the exclusion of losses or gains on similar crypto transactions.

Reviewing the Internal Revenue Code

The bill has been called the Virtual Value Tax Fix Act of 2019 and is being reintroduced by Congressman Ted Budd, having been first introduced in the previous Congressional session. The bill is being put before the House Committee on Ways and Means, and it seeks to amend the 1986 Internal Revenue Code, thus effectively ending the double transaction of virtual currencies.

According to the 1986 Code, losses and gains in transactions involving properties of a similar kind are still unrecognized. For instance, when there is an exchange of real property, be it for business or trade for a similar real property for business or trade, no loss or gain shall be recognized.

The bill seeks to have the exchange between cryptocurrencies of a similar kind to be treated the same way as transactions involving similar properties. Once the bill gets enacted, then cryptocurrencies will be excluded from double taxation under the current Internal Revenue Code.

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Safe Harbor Bill

Besides the Budd bill, there is another crypto legislation being before the house. At the beginning of last month, Congressman Tom Emmer reintroduced the Safe Harbor for Taxpayers with Forked Assets Act of 2019. The bill aims to foster growth in the blockchain industry by reducing the burden on businesses in figuring the right tax laws.

The Congressman said that taxpayers will only conform to a law that is clear. The bill will not eliminate taxes on forked assets but, rather, it seeks to offer a safe harbor to those investors who fail to account properly for hard fork assets when calculating tax returns.

In June, Ted Budd told the House Way and Means Committee that virtual currencies should have a de minimis tax exemption similar to foreign currencies.

What do you think?

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India’s Proposed Crypto Bill Puts Crypto Owners in Jail for 10 years

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Crypto bill

Crypto bill

Lawmakers in India have proposed a crypto bill that is considered by many to be ludicrous. The country is clamping down on cryptocurrency with an extreme proposal that would make Bitcoin and crypto ownership completely illegal. Those caught holding, mining, owning, or trading any digital asset could face a prison sentence of 10 years.

The bill coincides with the country’s plan to launch its own state-backed cryptocurrency—the Digital Rupee. The message is clear; people will have to engage with crypto the government’s way or not at all.

India’s Proposed Crypto Bill

The bill proposes that anyone involved in the crypto ecosystem should face criminal punishment. Any persons who “mine, generate, hold, sell, transfer, dispose of, issue or deal in cryptocurrencies, directly or indirectly” would face a 10-year prison sentence.

So severe is the punishment that those caught committing the crimes would face “non-bailable” sentences.

The draft crypto bill was first sourced by BloombergQuint. The source goes on to say that the courts will use four criteria when sentencing someone. They are as follows:

  • Culpability of the accused
  • Actual and intended gain made, and loss caused
  • Repetitive nature of the offense
  • Harm caused to the system

The lawmakers are even going as far as using the accused’s crypto profits against them. Any incurred fines from the criminal act will be three times as much as the profit made in the first place.

According to BloombergQuint:

“The penalty imposed on the accused, according to the bill, shall be either thrice the loss caused to the system, or three-fold the gains made by him/her, whichever is higher. If the loss or gain can’t be reasonably determined, the maximum fine that can be imposed may be notified by the government.”

Should the bill be passed, anyone with Bitcoin or cryptocurrency will have to declare it and then get rid of it in 90 days. Further, the bill seeks to amend the Prevention of Money Laundering Act of 2002, to include all cryptocurrency and blockchain related activities.

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Where Does the Crypto Bill Leave the Digital Rupee?

In a rather hypocritical move, the government’s own cryptocurrency, the Digital Rupee, is exempt from such stringent laws.

The reason is the close ties to the country’s leading bank, the Reserve Bank of India (RBI), that this cryptocurrency would have. Both the central government and RBI will consult over the launch of the Digital Rupee.

Until now, RBI has been anti-cryptocurrency and blockchain. In 2018 it prohibited any RBI-regulated institutions from processing cryptocurrency purchases.

The proposed crypto bill puts to bed any hopes that India may adopt and regularize cryptocurrency.

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How is the Rest of the World Regulating Digital Assets?

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While bringing US-based institutions on-board with digital asset trading is key to enlarging crypto’s overall market cap, crypto will only be successful as a truly international force—and not one only limited to the G-7. To that end, I’m going to shed light on other countries’ unique approaches towards digital asset classes in order to understand what the future of crypto regulation may look like.

Singapore

The Singaporean government has recently instituted a major regulatory framework for cryptocurrencies and crypto payment services. The framework will include a licensing regime for crypto payment providers—a descriptor that includes exchanges—and will regulate the following:

  • The issuing of accounts and electronic money.

  • The transfer of money within and out of Singapore.

  • The acquisition of merchants who will use their platform.

  • Money changing and the dealing in and exchange of digital payment tokens such as Bitcoin.

Singapore instituted this new framework with an intention to bolster its economy’s already strong financial technology presence. Association of Cryptocurrency Enterprises and Startups Singapore (“ACCESS”) chairman Anson Zeall has pointed to recent developments in Singapore’s crypto regulatory regime, noting that it is becoming more competitive at the international level with recent developments such as a new voluntary ‘code of practice’ that aims to proactively allow crypto players to adhere to anti-money laundering standards to promote public and commercial trust in their services.

New Zealand

As of September 1 of this year, companies in New Zealand can legally pay their employees in cryptocurrencies such as Bitcoin. This new guidance from the government lays out specific rules, however, that govern how companies will be able to take advantage of this opportunity, including:

  • That the payments must be in regular, fixed amounts.

  • The digital currency of choice must also be pegged to at least one regular currency.

  • The digital currency must be able to be converted directly into a standard form of payment.

While this guidance isn’t anything new, as the US, UK, and Australia have offered similar rules, it is yet another sign that crypto adoption and use is only increasing.

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Liechtenstein

Liechtenstein regulates cryptocurrencies under the remit of its Due Diligence Act, which has a primary purpose of combatting money laundering and other illegal activities. While its Financial Market Authority recognizes that “the production and the use of virtual currencies as a means of payment are currently not subject to any [business] licensing requirements,” the Authority assesses licensing requirements and ICO filings on a case-by-case basis, leading to some uncertainty about when exactly certain regulations apply.

In addition, Liechtenstein is in the process of implementing a groundbreaking “Blockchain Act” that allows every possible asset, including real estate, bonds, and securities, to be tokenized, digitalized, and listed on a cryptocurrency exchange. This legislation creates a clear regulatory environment that counters risks, provides clarity, and facilitates the development of a token economy.

Finally, Liechtensteinische Post AG, its postal service, now offers cryptocurrency exchange services at its brick and mortar locations.

Belarus

Belarusian President Alexander Lukashenka issued a decree in 2018 that fully legalized cryptocurrencies, initial coin offerings (ICO), and smart contracts. The decree also instituted a zero percent tax on crypto holdings until 2023. The move was designed to boost crypto innovation and attract interest in Belarus’s HTP, a special economic zone that has been likened to the country’s own Silicon Valley. Belarus’s government declared earlier in 2018 that a full crypto regulatory regime was a top priority in order to transform its economy, public administration and social services.”

Regulatory Innovation

Many small jurisdictions like Belarus, Singapore, and Liechtenstein are crafting sector-specific rules for crypto, attempting to attract companies by providing regulatory security as well as tax breaks. On the other hand, larger countries with more established financial sectors are taking a more conservative ‘wait and see’ approach. In my view, much of the innovation in crypto regulation is coming from smaller countries due to a prevailing attitude of crypto as an opportunity, not as an active threat to established financial orders.

This article was curated through CryptoCurrencyNews’ Contributor Program. If you would like to write for us, send us your submission!

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France’s Crypto Regulations | Finance Minister Wants Whole EU Adoption

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crypto regulations

crypto regulations

This week, some are focusing on the recent fire that broke out in Notre-Dame cathedral, while others are looking at Bruno Le Maire, the French Finance Minister. According to Le Maire, EU member states should implement the same crypto regulations the French parliament approved last week.

Here’s what we know.

French Crypto Regulations are Key, According to Le Maire

Last week, France’s parliament approved a law called the Pacte (Action Plan for Business Change) law, which pertains to cryptocurrencies. The law also deals with other business plans. According to Reuters, the new law will attract crypto traders to the Western European country. It will do so by giving these traders recognition and taxing their profits in return. The goal of this new law is to create a market in Paris, says Reuters.

Other sources say that at a blockchain event in Paris, Le Maire told those who attended that he plans to “propose to my European partners that we set up a single regulatory framework on crypto-assets inspired by the French experience.” He also reportedly said that the French model “is the right one.”

Will EU Member States Bite?

It will be interesting to see if EU member states decide to listen to Le Maire and adopt French crypto regulations. After all, cryptocurrencies are either banned or unregulated in most parts of the world.

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If Le Maire were to propose this (like he said he would), the relationship countries have with cryptocurrencies may change.

Takeaway

While there are places in the world that are regulating digital currencies in their own ways—Malaysia just regulated them back in January—it will be interesting to see if the European Union develops one stance on cryptocurrencies, based on French crypto regulations.

As we approach the month of May, be sure to keep updated with this story, as it will likely impact a handful of crypto traders.

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South Africa Plans New Crypto Regulations: Key Factors to Watch

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crypto regulations

crypto regulations

Over the past few years, the popularity of cryptocurrencies has increased at an exponential rate, and due to that enormous growth, crypto regulations have become an important part of the discourse. In many countries across the world, cryptocurrencies are now legal, and millions of people trade in a wide range of assets every day.

All About New Regulations

It has now emerged that the South African Reserve Bank (SARB) is all set to introduce new regulations when it comes to the use of cryptocurrencies. The bank is trying to bring in new rules that will make sure that people in the country are not able to violate currency controls.

According to reports in the local media, discussions surrounding crypto regulations have been going on for around five years now. Kuben Naidoo, who is the deputy governor of the SARB, stated that it is believed that they are going to come into effect at some point in the first quarter of 2020.

Over the years, governments have often tried to steer clear of efforts to regulate the crypto sector. However, the number of users has grown rapidly within that time, and it is no wonder that the South African authorities are preparing to bring in some order into the sector.

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That being said, the steps being taken in the country regarding crypto regulations are certainly going to be unpopular with the crypto industry and the wider crypto community. Prior to these statements from the SARB, the FirstRand Bank decided to no longer do business with digital currency exchanges.

The bank in question is one of the biggest in South Africa, so its decision is a disturbing one. A prominent voice in the crypto community in the country stated, “The implications of the Sarb clamping down on cryptocurrency use for the purpose of stricter capital controls are far-reaching and alarming.”

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Assembly Bill 953 | New Legislation Combines Weed and Stablecoins

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Assembly Bill 953

Assembly Bill 953

Lawmakers in California have introduced a new bill geared towards cannabis companies. Assembly Bill 953 was introduced on February 21st. This new piece of legislation would allow cannabis-related businesses to pay taxes and fees in digital currency—more specifically, in stablecoins.

Assembly Bill 953

If passed, Assembly Bill 953 would allow all California-based tax offices (state, city, and county) to accept stablecoins as a form of payment. Cannabis companies would be able to pay their cultivation taxes with stablecoins. At this time, a specific stablecoin has not been identified, and it remains unknown if all forms of stablecoins will be accepted.

Assembly Bill 953 wouldn’t go into effect until January 1st, 2020, if it is approved at all.

Currently, the state of California imposes a 15% state excise tax on cannabis and cannabis products. Because of this, cannabis companies tend to owe quite high taxes.

Another issue many cannabis businesses have run into is securing simple financing services from banks. There are a few states that have legalized the use of recreational cannabis, but it is deemed illegal under federal law. Most banks are secured by the Federal Deposit Insurance Corporation (FDIC) and won’t finance ‘illegal’ activity.

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Due to this, cannabis companies hold hundreds of thousands of dollars in cash at any given time. Assembly Bill 953 is not geared towards boosting cryptocurrency or the legitimacy of stablecoins, but more to reduce the vast majority of cash that gets flooded into the tax offices across the state.

California’s State Treasurer, Fina Ma, recently testified in front of the US House Committee regarding the amounts of cash collected. Ma said:

“Duffel bags and sometimes suitcases of cash would arrive quarterly at some of our designated offices and some business owners had to drive 350 miles to pay their taxes.”

It remains unknown at this time when Assembly Bill 953 could be approved.

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The Latest in Cryptocurrency Regulations and the G20 Summit

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Cryptocurrency Regulations

Cryptocurrency Regulations

Cryptocurrency regulations seem to be gaining traction across the globe with the latest to call for regulation being the G20 finance ministers and central bank governors. The ministers and governors have asked the Financial Stability Board and the global standards-setting organizations to collaborate in the monitoring of cryptocurrency risks.

Call For More Cryptocurrency Regulations

In a note, G20 finance ministers indicated that they are welcoming the directory of FSB of cryptocurrency regulation. The statement indicated that although cryptocurrency does not pose a risk to the financial stability of the world at the moment, its regulation is necessary to avert risks related to consumers, to counter financial terrorism, as well as to anti-money laundering. The finance ministers asked the FSB and the standard-setting bodies to increase monitoring of risks as well as consider working on multilateral responses.

Vancouver mayor, Kennedy Stewart, on Friday last week suggested that Bitcoin ATMs should be banned because of risks associated with money laundering. The move comes days after eight individuals were apprehended in Spain on money laundering charges while trying to change fiat currency into cryptocurrency.

Growing Concerns Regarding Bitcoin ATMs

On the issue of ATMs, there was an incident in London’s Bond Street station where an ATM began spitting money. The incident occurred when a customer was withdrawing money, and the Bitcoin ATM began tossing out money.

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The CEO and owner of Poland-based Bitcoin ATM firm Adam Gramowski said, while giving insight on the incident, that their ATMs usually support huge transactions and the customer was not careful. He said that a redesigned presenter would be a better solution to cope with smaller denominations that are allowed in the UK.

In April, Polish cryptocurrency exchange Coinroom closed down and took up to $15,000 worth of customer accounts, and there is no way founders can be contacted. It is incidents such as these that are the reason officials are calling for more cryptocurrency regulations. India is taking this to the extreme, and regulators have proposed a jail term of ten years for anyone found engaging in cryptocurrency dealings.

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