Global Regulator Roundup – FTX/Voyager Deal Potentially on Hold, AML/KYC Crackdown in Japan, and a Crypto Tax Review in France

With digital assets operable on a global scale, regulators from around the world each need to decide how to approach their rise to prominence.  The following are a few recent developments which shed light on how different countries are approaching this task.

A Texan Investigation – FTX US

FTX has been one of the biggest names within the digital asset sector in 2022.  While a plethora of companies have struggled to stay afloat during the market downturn, often due to fallout from the TerraForm collapse, FTX has capitalized by acquiring and bailing out various companies over this time.  This however does not mean that FTX has not run in to its own roadblocks along the way.  It is now believed that FTX is being investigated by the Texas State Securities Board (TSSB), with the regulator positing that the exchange has violated securities laws through its offering of a ‘yield-bearing' product.

In a recent filing pertaining to Voyager Digital, TSSB Director of Enforcement, Joseph Rotunda, stated that, “FTX Trading, along with West Realm Shires Services Inc. dba FTX US (“FTX US“), may be offering unregistered securities in the form of yield-bearing accounts to residents of the United States.”  He continues, “These products appear similar to the yield-bearing depository accounts offered by Voyager Digital LTD et al., and the Enforcement Division is now investigating FTX Trading, FTX US, and their principals, including Sam Bankman-Fried.”

Due to this potential violation of securities laws, Rotunda believes that the purchasing of Voyagers remaining assets should not be allowed until a full investigation has been completed.  He states, “FTX US should not be permitted to purchase the assets of the debtor unless or until the Securities Commissioner has an opportunity to determine whether FTX US is complying with the law.”

Japan to ‘Beef-Up' AML/KYC

Meanwhile, in Japan, recent local reports have indicated that amendments may be coming soon to AML/KYC laws within the country.  As digital assets have gained popularity, the amount of crimes involving their use has spiked.  It is this spike that has drawn the governments attention to the remittance industry and money-laundering.

Proposed changes would allow for higher fines, and the ability to to freeze assets held by both individual investors and companies alike.  In addition, it is also believed that if enacted, said changes will involve more transparent KYC practices among exchanges.  Such companies will need to share information with regulators such as client names, and address/transaction tracking.

France to Re-Evaluate Crypto Tax Laws

Over the years, various nations have had grand visions for a future in which they become hubs for the burgeoning blockchain sector – one such nation being France.  It has now been announced by Finance Minister, Bruno Le Maire, that the nation's tax rules pertaining to cryptocurrencies will undergo review in the coming months.

After stating that France wants, “…to be the European hub of the crypto-asset ecosystem”, Le Maire specifically acknowledged a trio of fears which must be avoided for this goal to be reached, otherwise see a ‘suffocating' of the sector.

• Fear of Innovation
• Fear of Competition
• Fear of Decentralization

With regards to crypto taxes, Le Maire made it clear that France does not view such digital asset in the same vein as stocks.  It is because of this that the country plans to, “…use the year 2023 to deepen [its] reflections with all the players concerned, in order to define whether new adaptations to tax legislation are necessary.”

Notably, industry giants like Binance and Crypto.com have greatly increased their presence within France over the past year, with the latter announcing that the nation will soon play home to its European headquarters.