Recent reports have provided new insight into the Internal Revenue Service’s concerns about Bitcoin tax evasion, and appear to indicate that only a small portion of Bitcoin users ever bother to report their profits and losses in their annual filings with the agency. The revelations came as the IRS formally filed a lawsuit in federal court to force the Coinbase exchange to obey the agency’s John Doe Summons requiring the release of exchange customer information.
Chinese regulators appear to be stepping up efforts to bring order to their nation’s digital currency landscape in the wake of the SEC’s denial of the Winklevoss twins’ ETF proposal. While People’s Bank of China director Zhou Xuedong recently acknowledged the importance of tech innovation, he also declared that regulation is essential to prevent illicit activities and financial bubbles. According to Xuedong:
Regulation is a touchy subject in the bitcoin industry. Many cryptocurrency idealists who truly believe they are invincible to government reach, also believe that the lack of bitcoin-specific regulation gives them a free pass. They may be in for a nasty surprise when they find out just how long ‘the long arm of the law’ really is. Governments around the world already have an arsenal of catch-all laws that can be used to fight tax evasion and other illegal activities that attempt to hide behind the anonymity of some cryptocurrencies and related services.
In 2016, Alaska legislators tried and failed to pass a bill that would have required digital currency companies to register under the state’s money services licensing regime. At least one member of the legislature appears undaunted by that bill’s failure to pass, and has introduced a new bill to regulate cryptocurrency firms. That proposed law, House Bill 180, was introduced this week by representative Kito Fansier.
One of the most popular bits of conventional wisdom in recent years has been the notion that Bitcoin and other digital currencies are ideal vehicles for money laundering and terrorist funding efforts. Those claims have been bandied about by government officials around the world, and seem to be accepted as gospel by many in the mainstream media. However, a new report from UK think tank Royal United Services Institute (RUSI) calls those assumptions into question.
According to reports from RIA Novosti, Russian Prime Minister Dmitry Medvedev has directed his country’s Ministries of Communications and Economic Development to study blockchain technology for possible use in Russia’s new Digital Economy program. The instructions were delivered in a recent meeting between Medvedev and various government vice-premiers.
Prosecutors in Norway are arguing that a trio of men charged with illicit online drug sales in that country should be forced to pay part of their criminal penalty using Bitcoins. If prosecutors get their wish, the three men would be required to pay a total of 120 Bitcoins, as well as an additional 3.1 million Norwegian kroner, as a penalty for their alleged drug sale activities on various underground websites.
The United States Securities and Exchange Commission (SEC) Today rejected Cameron and Tyler Winklevoss’ proposal for a Bitcoin exchange-traded-fund (ETF). The regulatory body cited the absence of digital currency regulation and the potential for fraud among its reasons for refusing the bid.
The three largest Chinese Bitcoin exchanges, BTC China, Huobi, and OKCoin, have all announced that their February suspension of Bitcoin withdrawals will continue indefinitely, pending regulatory approval from the People’s Bank of China (PBOC). The three exchanges announced the continuation of their self-imposed withdrawal suspension in separate statements released yesterday.
Last September, Standards Australia was chosen by the International Organization of Standardization (ISO) to lead a committee dedicated to the creation of global standards for blockchain technology. In a new report released this month, the group offers a roadmap that attempts to identify technical issues and relevant use cases, while prioritizing the development of those standards necessary to supporting broader acceptance and use of distributed ledger technology.
A group of more than thirty of the largest banks and technology companies have come together to form a new consortium focused on developing an Ethereum blockchain system that can be used by the finance industry. The Enterprise Ethereum Alliance was formed in December, and formally launched this week at a summit in Brooklyn, New York.
A number of Indian cryptocurrency companies have banded together to launch a new initiative called the Digital Asset and Blockchain Foundation of India, or DABFI, to facilitate self-regulation of their industry, help create standards for anti-money-laundering and know-your-customer rules, and promote awareness and acceptance for digital currency and blockchain technology. The Times of India recently reported that global law firm Nishith Desai Associates has been retained to assist in the development of self-regulations for the nation’s crypto industry.
While most digital currency analysts agree that some type of regulation is needed for the industry, they’d also tend to agree that any government intervention needs to be reasonable. The recent cryptocurrency regulatory changes in Hawaii were questionable at best, and they’ve resulted in at least one major exchange suspending its services to customers in the state. Citing the added cost burden imposed by Hawaii’s new requirements, the Coinbase exchange has announced that it will not be serving Hawaiian customers for the foreseeable future.
Venezuelan Bitcoin exchange Surbitcoin is expected to resume operations this week, enabling Venezuelans to once again use the platform to trade in the digital currency. The exchange announced the resumption of trading in a social media post last week. In that February 22 post, the exchange announced that service would be restored in approximately one week from that date, and asked that customers share the news with their friends and relatives.
The West Virginia legislature has included cryptocurrency in a list of monetary instruments subject to a proposed bill defining criminal penalties for money laundering offenses. The bill, titled Creating felony crime of conducting financial transactions involving proceeds of criminal activity, has a total of eleven sponsors – ten Republicans and one Democrat, and is currently being reviewed by the House Judiciary Committee.
California State Senator tony Mendoza last week submitted a bill designed to address the regulation of organizations that conduct charity raffles in the state. Noting that existing law already addresses raffles conducted by major league sports organizations, Senate Bill 741’s provisions would provide similar authorization to nonprofit organizations “established by, or affiliated with, a district agricultural association, county fair association, or citrus fruit fair association.” The measure has drawn some interest from the Bitcoin community, since it specifically addresses the digital currency:
A new report by Bank of Canada researchers suggests that Bitcoin and other digital currencies won’t succeed on a long-term basis without greater government regulation. To reach that conclusion, the report draws historical comparisons to a period in the 1800s when Canadians had access to government-issued currencies known as Dominion notes as well as other notes issued by private banks.
The US regulation of digital currencies is out of date, impractical, and damaging to a potentially lucrative economy. The lack of unity in state regulations has created an unworkable system that makes the operations of Fintech (Financial Technology) companies complicated and confusing. A unified and clear regulatory policy would clear these muddy waters and benefit the digital currency industry, and have a positive impact on the American economy as a whole.
The Hong Kong Securities and Futures Commission has reportedly joined the R3 blockchain group, according to a new report in the Wall Street Journal. The regulator is collaborating with the group’s banks and blockchain tech firms to test the technology’s capabilities for recording and settling transactions. The formal entry into the consortium is simply the latest evolution in the relationship between the regulator and R3 – a partnership that has seen the parties work together on similar tests in recent months.
It’s been a stressful few days for China’s Bitcoin enthusiasts, as the People’s Bank of China (PBOC) seems to have expanded its investigation of the country’s Bitcoin exchanges. After last month’s meetings with the three largest domestic exchanges saw those companies implement new fees and other policy changes, the PBOC this week turned its attention to nine of the smaller Bitcoin platforms. In a meeting with those exchanges on Wednesday, the central bank reportedly focused on the need for greater anti-money-laundering efforts.