DSG CRYPTO REGULATORY ROUNDUP: AUGUST 2024
International Bodies
South Korean Crypto Exchanges Face Unexpected Supervisory Fees: Major South Korean cryptocurrency operators such as Upbit, Bithumb, and Coinone will now be required to pay a supervisory fee as part of the newly enforced Virtual Asset User Protection Act. The Financial Services Commission (FSC) announced on July 1 the revised “Enforcement Decree of the Act on the Establishment of the Financial Services Commission, etc.” and the revised ‘Regulations on the Collection of Financial Institution Contributions, etc.’ Virtual asset operators will be required to contribute to supervisory fees for inspections conducted by the Financial Supervisory Service (FSS) starting next year. More here.
Hong Kong’s Largest Online Broker Launches Bitcoin and Ether Trading for 22 Million Users: Futu Securities International has launched Bitcoin and Ether trading for its 22 million Hong Kong-based customers. This makes Futu Securities the first online brokerage to directly offer cryptocurrency to Hong Kong-based retail investors, according to a report by the South China Morning Post. The platform debuted for trading on July 23. More here.
EU Watchdog Warns of Offshore Crypto Risks Under MiCA Regulation: The European Securities and Markets Authority (ESMA) issued an opinion highlighting the considerable risks posed by global crypto firms that seek partial authorization under the Markets in Crypto Assets (MiCA) regulation while conducting significant operations offshore. ESMA’s latest warning focuses on the intricate organizational structures of many global crypto firms, which are known to use EU-authorized brokers to route orders to execution venues based outside the EU, commonly in offshore jurisdictions. More here.
Hong King to Enhance Digital Asset Regulation in 18 Months: Hong Kong is set to enhance its digital asset regulations within the next 18 months. At the Foresight 2024 annual summit, David Chiu, a member of the Legislative Council of the Hong Kong Special Administrative Region, outlined the city’s strategic plans to attract technology talents, build new infrastructure and establish robust legislative supervision. More here.
United States
Republican Supported by Crypto Super PAC Loses Arizona Primary: Blake Masters, a Republican candidate for the U.S. House of Representatives in Arizona’s 8th Congressional District, lost his party’s primary. Abraham Hamadeh defeated Masters in the Republican primary with 29.8% of the vote. The Defend American Jobs Super political action committee (PAC), an affiliate of the Fairshake and Protect Progress PACs, disseminated roughly $600,000 in a media buy to support Masters. More here.
Digital Chamber Urges U.S. Senators to Support Lummis’ Bitcoin Reserve Bill: The Digital Chamber is calling on U.S. lawmakers to vote in favor of the Bitcoin reserve bill recently introduced by Wyoming Senator Cynthia Lummis. In an August 1 post on X, the lobby group said it is hand-delivering a letter to “every U.S. Senator,” which will explain that adding Bitcoin to America’s balance sheet can secure its position as a “global leader” and provide more stability in the face of “global economic uncertainties.” Lummis introduced the Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act of 2024 (or Bitcoin Act of 2024) on July 31. This bill would see the US Treasury set up Bitcoin vaults and buy 1 million Bitcoin over five years. More here.
FBI Issues Warning About Crypto Scammers Impersonating Crypto Exchanges: The United States Federal Bureau of Investigation (FBI) has issued a warning about scammers pretending to be affiliated with crypto exchanges to steal users’ funds. Scammers are contacting their targets through calls or messages and presenting themselves as employees of a crypto exchange. The scammers claim there are problems with the user’s account or that someone is attempting to compromise it. More here.
Ex-Binance Adviser to Join Kamala Harris Campaign: David Plouffe, a previous adviser for Alchemy Pay and cryptocurrency exchange Binance, is reportedly joining Democratic candidate Kamala Harris’ 2024 United States presidential campaign. The Harris campaign onboarded several senior advisers, including Plouffe. A former campaign manager and senior adviser for US President Barack Obama, Plouffe made forays into the crypto space after leaving the White House in 2013. He joined Binance’s Global Advisory Board in 2022 reportedly later disbanded and was a global strategic adviser for Alchemy Pay in 2023. Morehere.
2,200 Letters of Support for ‘Bitcoin Strategic Reserve’ Bill Sent to U.S. Senators: Over 2,200 letters were sent to United States senators in 48 hours urging them to co-sponsor and support Senator Cynthia Lummis’s newly proposed Strategic Bitcoin Reserve bill. Dennis Porter, founder of the Satoshi Action Fund, said that Democratic Party senators received 1,333 letters, Republican Party senators received 850, and Independents received 41. This bipartisan outreach demonstrates that interest in Bitcoin and its potential strategic value crosses political and ideological lines. More here.
Bill Proposes to Give Secret Service More Power to Pursue Crypto Crime: Senators Masto and Grassley introduced a bill aimed at expanding the Secret Service’s powers to combat cryptocurrency-related crime. The “Combatting Money Laundering in Cyber Crime Act of 2024” bill was introduced by Nevada’s Catherine Cortez Masto and Iowa’s Charles Grassley on August 2. It would expand the Secret Service’s authority to investigate cryptocurrency transactions made by unlicensed money transmitting businesses and potential frauds committed against US financial institutions. More here.
Trump Cautions Biden Administration Not to Sell Bitcoin: Former president Donald Trump cautioned the Biden administration against selling the United States’ Bitcoin holdings. Trump reiterated his stance that if the US does not innovate on the digital asset front, other countries will. He noted that China is already making advances in the cryptocurrency and artificial intelligence sectors. More here.
U.S. Senators Urge CFTC to Finalize Ban on Election Betting: Five United States Senators and three House representatives have renewed calls for the commodities regulator to ban betting on the 2024 presidential election. They claimed that such markets “could influence and interfere with elections and further erode public trust in democracy” in an Aug. 5 letter to the Commodity Futures Trading Commission Chair, Rostin Benham. The letter was signed by Senators Jeff Merkley, Richard Blumenthal, Chris Van Hollen, Elizabeth Warren, Sheldon Whitehouse and Representatives Jamie Raskin, John Sarbanes and Eleanor Holmes Norton. More here.
Kamala Harris Chooses Minnesota Gov. Walz as U.S. Presidential Running Mate: Kamala Harris has reportedly chosen Minnesota Governor Tim Walz as her vice-presidential pick. Walz previously served for over 12 years in Congress and is currently in his second term as Minnesota governor. Harris’s choice of running mate could have significant implications for the cryptocurrency industry, considering that Walz is known for his more stringent, regulatory-focused approach to the crypto industry. More here.
U.S. Policy Group Proposes Bitcoin Tax-Free Zone for Digital Economy Growth: A new U.S. proposal is underway which aims to establish the country as a global leader in the digital economy through the creation of a Bitcoin tax-free Digital Economic Zone (DEZ). The initiative, spearheaded by the USABTC policy group, advocates for the tax-free DEZ where Bitcoin can be traded and accumulated without capital gains taxes but with a tax on redemption. According to USABTC, the initiative could secure the US’s financial future by fostering a “resilient and innovative” economic environment, leveraging the potential of Bitcoin while maintaining the central role of the dollar. More here.
CFTC Announces $1M Award for Crypto Whistleblower: The U.S. Commodity Futures Trading Commission (CFTC) announced that a whistleblower who assisted the financial regulator in an enforcement action “connected to digital asset markets” would receive a $1 million reward. In an August 8 notice, the CFTC said it had brought an enforcement action against a firm connected to the digital asset space based on “information about improper trading” provided by an unnamed whistleblower. The regulator did not suggest which crypto firm it was referring to. More here.
U.S. Democrats are ‘Increasingly Gravitating Toward Crypto’: In a poll conducted with Mercury Analytics among 804 self-identified Democratic registered voters after U.S. President Joe Biden said he would not be running for reelection, data suggested that Vice President Harris could increase her chances of winning in November by appealing to crypto-focused voters. Of the Democrats surveyed, 27% said they were “somewhat likely” or “very likely” to purchase crypto in the next year. More here.
Senate Proposal for Crypto Tax Exemption is Long Overdue: Senators Lummis, Budd, Sinema, and Gillibrand introduced a proposal, the Virtual Currency Tax Fairness Act, to the 118th Congress in July. Landon Zinda from Coin Center described the bill as, “creating a sensible de minimis exemption from capital gains tax for low-value cryptocurrency transactions in day-to-day use.” More here.
Senator Chuck Schumer Pledges Pro-Crypto Laws by End of 2024: Democratic Senator Chuck Schumer said he’s making it his goal to pass bipartisan pro-crypto legislation by the end of 2024 and that he believes a Kamala Harris administration might adopt policies friendly to the industry. Speaking at the Crypto4Harris Town Hall meeting, Schumer said lawmakers could no longer “stick their heads in the sand” when it comes to fostering crypto innovation in the U.S. More here.
U.S. Financial Services Committee Leaders Want ‘Regulatory Sandboxes’ for AI: Members of the United States House Financial Services Committee (FSC) responded to a request for feedback from the U.S. Treasury concerning the regulation of artificial intelligence in an Aug. 16 letter addressed to Treasury Secretary Janet Yellen. The letter calls for what amounts to a light-touch approach to regulation. “A one-size-fits-all approach will only stifle competition among financial institutions,” wrote the signatories, adding that “regulators must evaluate each institution’s use of AI technology on a case-by-case basis.” More here.
U.S. Mulls Applying Fiat Reporting Mandate on Crypto Transfers: The U.S. Department of the Treasury issued a semiannual regulatory agenda on Aug. 16, revealing an upcoming federal attempt to level the regulatory playing field for cryptocurrencies and traditional fiat currency. The Board of Governors of the Federal Reserve System and the Financial Crimes Enforcement Network plan to revise the meaning of “money” (used in the Bank Secrecy Act) to tighten reporting requirements on financial institutions for domestic and cross-border cryptocurrency transactions.
RFK Jr. Drops Out of Presidential Race While Trump Takes Lead on Polymarket: Independent candidate Robert F. Kennedy Jr. has withdrawn from the 2024 presidential elections in the United States. Kennedy withdrew from the election race on Aug. 22, according to a document filed to the Arizona Secretary of State. The withdrawal came days after Republican presidential candidate Donald Trump expressed his openness to Kennedy playing a role in his administration if the independent candidate dropped out. According to Polymarket, 51% of users were betting on Trump winning the election while only 47% believed that Kamala Harris has a chance of victory. More here.
Crypto Advocates File Brief Against SEC’s Investor Tracking Database: The DeFi Education Fund and the Blockchain Association jointly filed an amicus brief in a case brought by two individuals and the New Civil Liberties Alliance (NCLA) against the U.S. Securities and Exchange Commission (SEC), its chairman Gary Gensler and the Consolidated Audit Trail (CAT). The complaint does not mention cryptocurrency or blockchain, but the organizations argue that the CAT could have a profound negative effect on crypto users.
California Lawmakers Push Through Controversial AI Bill Opposed by OpenAI: Lawmakers in the state of California have pushed forward an artificial intelligence (AI) safety bill that has been a subject of controversy in the tech industry with pushback from key players and elected officials. On August 28, Senate Bill (SB) 1047 passed the State Assembly and now awaits a final say from the state’s governor, Gavin Newsom. Newsom will have until September 30 to decide whether to sign it into law or veto it. More here.
Trump’s Approach to Crypto Voters ‘Seems to Have Paid Off’: With 67 days until the United States presidential election, a poll suggested that Donald Trump may be improving his odds with single-issue crypto voters. According to the results of a poll released by Fairleigh Dickinson University on August 30, 801 US voters who said they owned digital assets said they were more likely to vote for Trump over Democratic nominee Kamala Harris in November. The nationwide poll conducted between August 17 and August 20 said Trump had a 12-point lead over Harris among registered voters who own crypto, while Harris had a 12-point lead among non-crypto holders. More here.