Welcome to Law Decoded, your weekly digest of all the major regulatory developments.
There was some substantial good news for the crypto last week, but the prevailing scenario is still how FTX unfolds. While the extradition of failed exchange founder Sam Bankman-Fried seemed logical enough since the saga began, last week the 30-something received the first official call: the Texas State Securities Board (SSB) has invited the former CEO to attend the hearing on the alleged sale of unregistered securities on February 2. SSB Director of Law Enforcement Joe Rotunda is hoping to get a cease and desist order from the judge at the hearing.
However, the man himself does not rush to return to America, even for the invitation to Congress. Bankman-Fried signaled that he did not want to testify before the United States Congress until he was “finished learning and considering what happened.”
Meanwhile, the FTX crush continues to cause a ripple effect all over the world. In Singapore, Prime Minister Lee Hsien Loong and Deputy Prime Minister Lawrence Wong face burning questions for their failure to protect retail investors. As Singaporean state-backed investor Temasek was one of 69 investors to invest in crypto exchange FTX’s $420 million funding round in October 2021, opposition MPs recommended a bipartisan committee to question Temasek about his investment strategies.
In Europe, the President of the European Central Bank, Christine Lagarde, underlined the failure of FTX by declaring the need for the second package of crypto regulations after the entry into force of the crypto-asset markets (MiCa). His colleagues on the U.S. House Financial Services Committee will also pay more attention to the FTX case during the special hearing scheduled for Dec. 13. questions its chairman, Rostin Behnam, predictably, has asked for more power from the Commission.
Brazil passes law to legalize crypto as payment method
And now for the good news! Brazil’s Chamber of Deputies, a federal legislative body, has passed a regulatory framework that legalizes the use of cryptocurrencies as a method of payment in the country. Although the document does not make Bitcoin (BTC) legal tender like in El Salvador, it will still include digital currencies and airline mileage programs in the definition of payment methods which are under the supervision of the country’s central bank.
In addition to designating crypto as a form of payment, the law allows for the creation of licenses for crypto exchange platforms and for the custody and management of crypto by third parties. In addition to this, the law will require exchanges to make a clear distinction between company funds and user funds, to avoid another incident like the collapse of FTX.
Italy to Impose a 26% Capital Gains Tax on Crypto Profits
Italy plans to tighten regulations on digital currencies in 2023 by expanding its tax laws to include cryptocurrency trading. Its 2023 budget plans to impose a 26% tax on profits over 2,000 euros ($2,062) made from cryptocurrency trading. Historically, digital currencies have had lower tax rates because they have been considered “foreign currencies”. If the proposed bill becomes law, taxpayers will have the option to declare the value of their digital assets starting January 1 and pay a 14% tax. This aims to encourage Italians to declare their digital assets on their tax returns.
South Korean judge rejects arrest warrants for Do Kwon’s former associates
A Seoul Southern District Court judge reportedly overturned arrest warrants for Terra co-founder Shin Hyun-seong, as well as three Terra investors and four developers. Judge Hong Jin-Pyo said there was little risk of Shin or Terra’s associates destroying evidence related to the case against the crypto firm. Do Kwon, who also faces legal action in South Korea for his role in the collapse of the company, is still not expected to return to the country, according to local press.