The Dubai Financial Services Authority (DFSA) has unveiled a comprehensive digital asset regime designed to attract and support global Web3 enterprises. In an exclusive interview with Hong Kong Wen Wei Po, DFSA President Zhuang Sitao discussed the authority's initiatives aimed at creating a conducive regulatory environment for digital assets, including investment tokens and cryptocurrencies.Key HighlightsTailored Digital Asset Systems:- Investment Tokens (2021): The first system, introduced in 2021, focuses on investment tokens, also known as tokenized assets. This framework sets clear regulatory expectations for investment products that use blockchain technology to represent ownership or other rights. The system provides a structured regulatory approach, ensuring transparency and compliance, which in turn fosters investor confidence and market stability.- Crypto Tokens (2022): Launched in 2022, the second system regulates cryptocurrencies and stablecoins. It aims to create a clear and stable regulatory environment for virtual currencies, covering aspects such as issuance, trading, and usage. This framework ensures market transparency, and investor protection, and addresses potential risks associated with cryptocurrencies.Regulatory Framework and InitiativesRegulatory Clarity and Market Certainty- Comprehensive Rules: The DFSA's digital asset systems are designed to clarify regulatory expectations, providing market participants with the certainty needed to operate and invest confidently. By setting a clear regulatory path, the DFSA helps reduce uncertainties that could deter investment and innovation.- Support for Innovation: While ensuring a secure environment, the DFSA also promotes innovation within the digital asset space. Recognizing the need to balance regulation and innovation, the DFSA has adopted a proactive approach that encourages growth while maintaining necessary safeguards.Innovative Regulatory Tools:- Test License (Regulatory Sandbox): The DFSA has implemented an innovative test license, known as a regulatory sandbox. This initiative allows companies to develop and test new business models and products in a controlled environment without immediately meeting all regulatory requirements. This approach supports early-stage innovation while managing risks and ensuring consumer protection.- Technical Risk Supervision Team: A specialized team has been established to oversee technical risks associated with digital assets. This team's role is to maintain market integrity and financial stability by monitoring and addressing potential vulnerabilities within the digital asset ecosystem. Their work ensures that innovative advancements do not compromise the security or stability of the market.Interview Insights from DFSA President Zhuang SitaoGlobal Web3 Attraction:- Strategic Vision: President Zhuang Sitao emphasized the DFSA's strategic vision to position Dubai as a global hub for Web3 enterprises by creating a favorable regulatory climate. By attracting digital asset innovators from around the world, Dubai aims to lead the way in the burgeoning Web3 economy.- Holistic Approach: Through tailored digital asset systems and an innovative regulatory framework, the DFSA seeks to create a holistic environment that supports the digital economy, ensuring both growth and security. This approach sets a high standard for regulatory excellence and market development.Broader Implications for the Digital Asset IndustryGlobal Competitiveness:- Market Leadership: Dubai’s proactive regulatory approach enhances its competitiveness as a leading destination for digital asset businesses. This move aligns with Dubai’s overarching goal of becoming a global fintech leader, setting the stage for other jurisdictions to follow.- Regulatory Innovation: The DFSA’s initiatives serve as a model for an effective digital asset market.

According to Odaily, South African cryptocurrency traders have started receiving notifications from the South African Revenue Service (SARS) that their tax affairs are under review. The tax authority is gathering information from various cryptocurrency exchanges to assess compliance. Under the Tax Administration Act, traders who fail to provide the requested information could face criminal charges. SARS may also investigate instances where cryptocurrency ownership has not been declared in the past. According to Tax Consulting SA, this review could involve past transgressions by cryptocurrency traders. However, SARS has not provided clear guidance on whether cryptocurrency transactions are considered capital gains or income. Therefore, accurately recording profits and losses from domestic and foreign cryptocurrency exchanges remains a challenge.

According to Foresight News, the Nigerian Securities Exchange Commission (NSEC) is revising its regulations for Virtual Asset Service Providers (VASP) to 'expand the scope of regulation in line with current realities'. As part of this initiative, the NSEC has introduced an Accelerated Regulatory Incubation Program (ARIP) for the onboarding of VASPs. In addition, the NSEC has directed all operating and potential VASPs to access its electronic portal and complete the application process within 30 days. Non-compliance with this directive will result in enforcement action by the regulatory body. This move by the NSEC is seen as a step towards ensuring better regulation and control over virtual asset service providers in the country.

According to Odaily, the US Federal Accounting Standards Advisory Board (FASAB) has recently issued a technical bulletin (TB) to clarify the accounting and reporting standards for seized and confiscated digital assets. The board stated that confiscated cryptocurrencies should be considered as 'nonmonetary property', while Central Bank Digital Currencies (CBDC) should be regarded as monetary instruments. FASAB emphasized that cryptocurrencies 'usually do not possess all the characteristics of money', highlighting that they 'cannot effectively serve as units of account, mediums of exchange, or stores of value'. The bulletin further suggested that reporting entities use the 'publicly observable active market of specific digital assets' to determine the market value of seized and confiscated digital assets. It also pointed out that management should make judgments when choosing the most suitable valuation market. FASAB is responsible for establishing and issuing accounting standards for the US government.

According to CryptoPotato, two individuals have been detained and questioned by the UK Metropolitan Police and the Financial Conduct Authority (FCA) over allegations of running an illegal cryptocurrency operation exceeding 1 billion British pounds ($1.2 billion). The FCA has highlighted the importance of registration requirements for crypto businesses and issued warnings to consumers. The suspects, aged 38 and 44, were questioned and subsequently released on bail. The Metropolitan Police in London confiscated numerous digital devices associated with the business during searches of the suspects’ residences. The FCA press release stated that more than £1 billion of unregistered crypto assets are believed to have been bought and sold through this business. Therese Chambers, the Executive Director of Enforcement and Market Oversight at the FCA, emphasized the agency’s commitment to preventing illegal crypto activities in the UK financial system. She stated, 'The FCA has an important role to play in keeping dirty money out of the UK financial system. These arrests show we will do everything in our power to stop crypto firms from operating illegally in the UK.' The FCA has mandated registration for all crypto asset-related businesses since January 2021 to ensure compliance with UK money laundering regulations and combat financial crimes such as terrorist financing and illicit fund transfers. Since the requirement was implemented, more than 300 businesses have applied for registration to offer crypto-related services, but only approximately 44 companies have been successfully registered. The FCA emphasized its authority to issue directives and impose restrictions on crypto businesses as authorized by the MLRs. The watchdog regularly alerts UK citizens about the risks associated with crypto assets and maintains a list of suspected unregistered businesses. The FCA stated they would refrain from commenting on ongoing investigations at this time and will provide further updates as appropriate in the future.

According to Odaily, the Digital Chamber of Commerce has submitted feedback on the proposed 1099-DA form to the United States Internal Revenue Service (IRS). The form is designed to report digital asset transactions. The detailed response from the Chamber aims to simplify the form, making it easier for brokers dealing with digital assets such as cryptocurrencies to use, and to address taxpayers' privacy concerns. This includes only requiring taxpayers to provide necessary information for reporting digital asset transactions. The Digital Chamber of Commerce's feedback is an attempt to streamline the process of reporting digital asset transactions. By simplifying the form, the Chamber hopes to make it more user-friendly for brokers who handle digital assets. This move is also seen as a step towards addressing privacy concerns of taxpayers. The Chamber suggests that taxpayers should only be required to provide the necessary information for reporting their digital asset transactions, thereby protecting their privacy. This development comes as digital assets continue to gain prominence in the financial world. The IRS's proposed 1099-DA form is a reflection of the growing need for regulation and transparency in digital asset transactions. The feedback from the Digital Chamber of Commerce could play a crucial role in shaping the final form and its implementation.

According to U.Today, Ripple's Chief Legal Officer, Stuart Alderoty, has provided clarification on the legal status of XRP in California. This comes in response to recent concerns following a court ruling. The token, which is owned by San Francisco-based Ripple, has been under scrutiny as a civil securities lawsuit in Oakland progresses. The district court judge has allowed the lawsuit to proceed, ruling that a jury should decide whether XRP qualifies as a security for retail buyers on exchanges. However, Alderoty stressed that the California judge dismissed all allegations that Ripple violated federal securities laws. The only remaining claim in California, based on a 2017 declaration, pertains to state law and is set for trial. The plaintiff in this case, who did not purchase XRP directly from Ripple and is unsure if he was affected by the 2017 statement, reportedly lost a small sum of money on his trades. Alderoty expressed Ripple's anticipation for the cross-examination in this matter. This ruling contrasts with an earlier decision by Judge Analisa Torres, who determined that secondary sales of XRP were not securities. This decision initially seemed to favor Ripple. As a result, the popular cryptocurrency is not classified as a security in New York, a status that remains unchanged. The recent developments underscore a pattern of inconsistent rulings from state to state, emphasizing the need for federal legislation to establish a consistent regulatory framework for cryptocurrencies.

According to U.Today, Ripple CEO Brad Garlinghouse has expressed satisfaction with a recent ruling in a civil securities lawsuit against his company, describing it as a 'big win.' Judge Phyllis Hamilton of Northern California's U.S. District Court has allowed the lawsuit to proceed to trial. The lawsuit includes a state law claim based on statements made by Garlinghouse about XRP in a 2017 interview. However, Judge Hamilton dismissed four claims related to Ripple's alleged failure to register the controversial XRP token as a security. Garlinghouse maintains that the recent California court decision does not negate the New York Court decision. This follows attorney Fred Rispoli's argument that the XRP token might be recognized as a security in California. Garlinghouse has criticized the claim that will go to trial, describing it as an attempt by 'trolls' to manipulate the US legal system to receive substantial class action settlement. The claim in question relates to a 2017 interview in which Garlinghouse spoke about his 'long' position on the Ripple-affiliated XRP token. Plaintiff Bradley Sostak argues that this statement was misleading as Garlinghouse sold millions of XRPs on various exchanges that year. Garlinghouse also stated in another interview that Ripple was going to drive 'a massive amount of demand' for the token as it was solving 'a trillion-dollar problem.' It is also alleged that Ripple collaborated with a marketing agency when responding to questions from the token's purchasers. Garlinghouse asserts that he stands by his statements and is eager to clarify them during the upcoming trial.

According to Odaily, the Blockchain Association has voiced its opposition to the broker rules proposed by the U.S. Internal Revenue Service (IRS). The association argues that these regulations would impose an undue burden on investors, cryptocurrency companies, and the IRS itself. The association cites the Paperwork Reduction Act, stating that government regulatory bodies should not impose unnecessary paperwork requirements on individuals and entities within the financial system. The letter mentions that if these rules are passed, they would result in an additional 8 billion tax forms, wasting 4 billion hours of processing time, and annual compliance costs would reach $254 billion. This is a stark contrast to the IRS's initial estimate of total compliance costs being $136 million. Furthermore, the association believes that an annual compliance cost of $254 billion is unreasonable for a market that at most generates a $10 billion tax gap. In 2023, the association submitted a 39-page letter detailing comprehensive objections to these regulations. They believe these rules are extremely difficult to comply with for decentralized financial protocols, reflecting the government's misunderstanding of blockchain and cryptocurrency.

According to Odaily, Apple has decided to postpone the introduction of its new artificial intelligence technology to the European Union market, affecting hundreds of millions of users. The company announced on Friday that it will not release Apple Intelligence, iPhone Mirroring, and SharePlay Screen Sharing to EU users this year. The decision is due to concerns that the Digital Markets Act could force Apple to compromise the security level of its products and services. In a statement, Apple expressed concerns that the interoperability requirements of the Digital Markets Act might compel them to undermine the integrity of their products in a way that weakens user privacy and data security. Under the Digital Markets Act, Apple anticipates receiving a formal warning from EU regulatory authorities. The company is suspected of preventing some apps from directing users towards cheaper online subscription services. Earlier this year, Apple was fined 1.8 billion euros (approximately 1.9 billion dollars) by EU regulatory departments for this issue. The company's decision to delay the launch of its new AI technology in the EU is seen as a response to these regulatory pressures.

According to Odaily, the U.S. Securities and Exchange Commission (SEC) has concluded its investigation into Consensys' Ethereum 2.0 without filing any charges. However, this does not necessarily mean that the SEC has definitively determined that Ethereum is not a security. Rather, it provides another data point that the commission has concluded that it will not currently file a lawsuit alleging that Ethereum is a security. Teresa Goody Guillén, a partner at BakerHostetler law firm and former SEC litigation attorney, stated that the SEC's decision to drop the investigation could be due to the high litigation risk the agency would have to bear. An anonymous former SEC enforcement attorney echoed this sentiment, stating that the closure of the case does not necessarily mean that they have decided that it is not a security. Instead, they may have simply decided not to risk litigation. This development marks a significant point in the ongoing debate over the classification of cryptocurrencies as securities. The SEC's decision not to pursue charges at this time does not definitively resolve the issue, but it does indicate a potential shift in the regulatory landscape for Ethereum and similar digital assets.

June 21, 2024 - In a significant development for the cryptocurrency market, Bloomberg ETF analyst Eric Balchunas has indicated that the long-anticipated Ethereum (ETH) spot ETF is expected to launch on July 2. This announcement followed a series of anticipated regulatory steps and revisions being submitted to the U.S. Securities and Exchange Commission (SEC).

According to Odaily, the Securities and Exchange Commission (SEC) of Nigeria has revised its rules concerning the issuance, trading platforms, exchanges, and custody of digital assets. In an official notice released to the public, the SEC outlined its plans to update these crucial regulations. As part of this regulatory reform, the U.S. SEC has launched a special compliance program called the 'Accelerated Regulatory Incubation Program' (ARIP). This program is specifically designed for Virtual Asset Service Providers (VASP), who are expected to complete their applications within 30 days of the announcement.

According to Cointelegraph: June 20, 2024 - San Francisco, CA – In the ongoing legal battle between Kraken and the United States Securities and Exchange Commission (SEC), Judge William Orrick suggested he is “inclined to deny” Kraken’s motion to dismiss, hinting at a significant development in the case that could classify digital assets on the exchange as securities.Key Points from the HearingDate & Venue: A hearing was held on June 20 in the U.S. District Court for the Northern District of California. Representing Kraken, attorney Matthew Solomon, and representing the SEC, attorney Peter Moores, presented their arguments before Judge Orrick.Judge’s Remarks: Judge Orrick indicated the plausibility of digital assets being offered and sold as investment contracts on the crypto exchange, making them securities under current laws.Competing ArgumentsKraken’s Position:- Legal Theory Dispute: Kraken's legal team disputed the SEC’s legal theory that considered the exchange an “ecosystem” for crypto asset securities.- Case Comparisons: Solomon referenced several cases including the SEC’s litigation against Terraform Labs, Telegram, and Ripple Labs. He argued the closest precedent to Kraken’s case was Coinbase’s.- Ecosystem Argument: Solomon criticized the SEC’s notion of an ecosystem for crypto, advocating for equal rule application across all sectors.SEC’s Argument:- Investment Contracts: The SEC's counsel focused on Kraken allegedly selling tokens as investment contracts, which would classify them as securities under the Howey Test.- Regulatory Compliance: The SEC pushed back against Kraken's theories, emphasizing regulatory standards should equally apply to crypto.Judge’s Leanings and Next StepsJudge Orrick did not issue a definitive ruling but clearly leaned towards denying the motion to dismiss. He suggested that “a year should be sufficient” for discovery if the case proceeds.Context and Background- SEC’s Enforcement Action: The SEC initiated its enforcement action against Kraken in November 2023, after Kraken had earlier settled with the SEC in February 2023, agreeing to a $30 million fine and ceasing its staking services for U.S. clients.- Related Cases: The court case comes amidst other high-profile SEC actions, including against Ripple Labs, and a resolved dispute with blockchain firm Consensys regarding Ether’s classification.Broader ImplicationsThis case is pivotal as it could set precedents for how digital assets are regulated and classified in the crypto industry. The court’s final decision could have far-reaching consequences for other exchanges and the treatment of cryptocurrencies under U.S. securities law.As Judge Orrick appears poised to advance the case, the crypto and regulatory communities await the final ruling with significant anticipation. This decision could redefine the legal landscape for digital assets, emphasizing the necessity for clear regulatory guidelines and compliance in the rapidly evolving crypto sector.

According to Odaily, a man in Melbourne County has been sentenced to two years in prison for identity theft. The charges include using fake identification to create cryptocurrency accounts on CEX. The court's decision marks a significant step in the ongoing fight against cybercrime and identity theft in the cryptocurrency sector. The man, whose identity has not been disclosed, was found guilty of using someone else's identity to open accounts on the cryptocurrency exchange platform. This case serves as a stark reminder of the potential risks and legal consequences associated with identity theft and fraudulent activities in the digital currency world.

According to U.Today, Ripple's Chief Technology Officer, David Schwartz, has drawn parallels between the Securities and Exchange Commission's (SEC) handling of Ethereum and China's past management of Bitcoin. This comes after Consensys, the developer behind the MetaMask wallet, suggested that the SEC is likely to conclude its investigation into Ethereum. Neil Hartner, a software engineer at Ripple Payments, expressed skepticism, implying that the investigation's closure might be more about public relations than providing regulatory clarity. Schwartz responded by comparing the SEC's actions to China's past behavior with Bitcoin. He pointed out that China used to alternately ban and unban Bitcoin, a strategy widely believed to manipulate the market for the benefit of Chinese oligarchs. By drawing this comparison, Schwartz implied that the SEC's inconsistent regulatory approach could be seen as similarly manipulative, favoring certain entities within the cryptocurrency market. Within the XRP community, this development has sparked a discussion, particularly among those who believe that Ethereum has received preferential treatment. Ripple's Chief Legal Officer, Stuart Alderoty, raised questions about whether this suggests that Ethereum transactions are not considered securities, and what it means for MetaMask and Ethereum staking. As the debate continues, the cryptocurrency community is calling for clearer and more consistent regulations. Schwartz's comments underscore the need for a transparent and predictable regulatory framework in the rapidly evolving crypto market.

According to Foresight News, a Hong Kong court has ruled that an individual, identified only as Huang, was operating an unlicensed securities advisory business. The Eastern District Court in Hong Kong found that Huang had set up and managed a Telegram chat group called 'FRANKY - Live Market Broadcast Valley' from January 2, 2018, to May 21, 2019. The group, which was open to the public for paid subscriptions, provided daily commentary on the performance of the Hang Seng Index and various Hong Kong-listed securities. Huang also responded to subscribers' questions within the group. Huang admitted to the charge of operating a business providing advice on securities without a license and was fined HKD 10,000. In addition to the fine, Huang was also ordered to pay the costs of the Securities and Futures Commission's investigation. Despite being a licensed representative of the Hong Kong Securities and Futures Commission, Huang was only authorized to act on behalf of the company to which he was affiliated. The case serves as a reminder of the legal requirements for operating a securities advisory business in Hong Kong.

According to Foresight News, the Financial Crimes Enforcement Network (FinCEN) of the US Treasury Department recently stated that cryptocurrencies are being widely used to support drug trafficking activities in Mexico, including the illegal trafficking of fentanyl. The cryptocurrencies involved include Bitcoin, Ethereum, Monero, and USDT. FinCEN has warned American financial companies to be aware of the criminal networks producing these dangerous narcotics. Cryptocurrencies, due to their anonymous nature, have become a preferred mode of transaction for illegal activities. The US Treasury Department is urging financial institutions to be vigilant and monitor any suspicious activities related to these cryptocurrencies. The use of digital currencies in illegal activities poses a significant challenge to law enforcement agencies worldwide. The warning from FinCEN comes as part of a broader effort to combat drug trafficking and other illegal activities funded through cryptocurrencies. The agency is working closely with other law enforcement agencies to track and disrupt these criminal networks. The fight against the misuse of cryptocurrencies in illegal activities is a top priority for the US Treasury Department.

According to Odaily, South Korea's Ministry of Strategy and Finance (MOEF) is reassessing its plan to tax virtual assets, originally scheduled to be implemented from January next year. This reassessment comes ahead of the announcement of a tax law amendment due next month, marking a stark contrast to the department's earlier stance of sticking to the original plan without reassessment. Experts have expressed concerns about the current tax framework, arguing that it is not effectively equipped to deal with the anonymity and decentralization characteristics of virtual assets. Notably, a recent study by the Congressional Budget Office highlighted significant flaws in the current legislation, particularly the reliance on cryptocurrency exchanges to provide transaction records necessary for taxation.

According to Odaily, Consensys has voiced its concerns over the proposed regulations and draft form 1099-DA by the United States Internal Revenue Service (IRS). The blockchain software provider believes that the information required by the proposed regulations and draft form is too extensive, leading to high compliance costs. Consensys emphasized that these provisions do not adequately consider the burden on potential brokers, especially those entities that traditionally have no reporting obligations. The company is urging a delay in the effective date of any reporting requirements related to software developers. Furthermore, Consensys is advocating for the introduction of multi-broker rules to alleviate the burden and costs for tens of millions of taxpayers. The company's stance highlights the ongoing debate around the balance between regulatory compliance and innovation in the blockchain industry.