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Regulatory Tidbits from Around the Globe – Tax Leniency, Exchange Warnings, Account Closures, and Expanded Scopes of Power

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Regulations surrounding digital assets are still in a constant state of flux around the world.  The following are a few developments from recent days highlighting this.

Philippine SEC Warns Against Using Binance

One week ago, we shared news out of the Philippines that involved a local think tank, Infrawatch PH, demanding the Philippine Securities and Exchange Commission shut down Binance.  While it may not go to the lengths Infrawatch PH was hoping for, the Philippine SEC has issued a warning against the exchange in response.

Oliver O. Leonardo, Director of the Philippine SEC states, “Based on our initial assessment, Binance is not a registered corporation or, partnership. Consequently, Binance does not possess the necessary authority  and or license to solicit investments as only registered corporations can apply for and be issued the necessary licenses to solicit investments.

Considering these  circumstances, we caution the public NOT TO INVEST with Binance.”

In addition to its public condemnation of Binance, the Philippine SEC is encouraging ‘victims’ of the exchange to come forth.

CFTC Gains Control Over Digital Assets in Proposed Bill

A long-awaited bill was just put forth by a pair of Senators that would see the powers over digital assets by the CFTC greatly expanded.  Titled ‘The Digital Commodities Consumer Protection Act’, this bill is a product of Senators Debbie Stabenow, and John Boozman.  It is described as giving, “…the CFTC the tools and authorities it needs to protect consumers, prevent fraud and abuse, and create transparency and accountability in the digital commodity marketplace.”

In it, the bill highlights not only the growing adoption of Bitcoin (>25% of United States population), but various risks associated with such assets due to a lack of regulation.  A few examples include,

  • Hacks
  • Transparency
  • Fraud
  • Market Manipulation

If successful, the bill would see registration with the CFTC become a requirement for all ‘digital commodity platforms’ – including brokers, dealers, custodians, and more.  From there, it would be up to the CFTC to appropriately oversee regulations, and ensure companies adhere to various anti-fraud, and operational standards laid out in the bill.

Japanese Advocacy Groups Request Leniency on Crypto Taxes

Within Japan, there are various groups which function to advocate on behalf of digital assets within the nation – two of which have just submitted a ‘tax reform request‘ that would see investors subject to 20% tax, down from 55%.

The proposal, which was a joint submission between the Japan Crypto-Asset Business Association (JCBA), and the Japan Crypto-Asset Exchange Association (JVCEA), was put together with the intent of fostering continued adoption of digital assets by bringing tax requirements more in-line with what is seen in foreign countries.

The proposal puts forth that by implementing its suggested amendments, regulators could achieve the following.

  • Increased ‘catchability’ through promoting tax returns
  • Fairness and consistency within tax system
  • Ensuring Japan remains competitive with foreign countries
  • Support development of Web3.0

If adopted, this proposal hopes to come in to effect as early as 2023.

Portuguese Banks Closing Exchange Accounts Despite Active Licensure

Recent reports indicate that various large banks within Portugal have begun closing accounts held by digital asset exchanges – despite various boasting the licensure required to operate by regulators.

The moves, which were taken under the guise of risk management, come from banks such as Banco Santander, Banco Comercial Portugues, and more.  For the time being, the Portuguese central bank has not issued any notices surrounding this development, other than that it is watching closely.

Interestingly, there already exists a region within Portugal known as Madeira which welcomes the use of assets like Bitcoin.  In fact, earlier this year it was announced that residents in the region would have no personal taxes imposed on buying/selling BTC.