Last week the committee, representing the 7 largest economies in the world (G7), have met in Niigata, Japan to discuss, among other topics, the global financial implications for central bank digital currencies (CBDCs) and the laws governing the transfer of cryptocurrency assets.
In a communique summarizing the discussions, the committee reiterated its support for developing CBDCs, albeit with some reservations. Committee members also discussed the controversial “Travel” rule requiring any financial institution processing cryptocurrency transactions over $3,000 to disclose the sender’s name, address and account information. And it expressed its total support for the initiative.
Meanwhile, the European Council has approved updated rules that extend tax reporting requirements to include transfers of crypto assets. DAC8 requires crypto asset service providers (CASPs) to collect information on crypto asset transfers of any amount to ensure traceability and identify suspicious transactions. It strengthens the European Union’s Anti-Money Laundering and Countering Terrorism Financing (AML/CFT) rules and proposes the creation of a new European AML body.
In another worrying development for the industry, the United Kingdom Treasury Committee “strongly recommended” regulating retail crypto trading and investment activity as gambling, consistent with the principle of “same risk, same regulatory outcome.” It argued the price volatility and lack of intrinsic value mean unbacked crypto assets will “inevitably pose significant risks to consumers.”
Biden won’t accept debt deal protecting crypto traders
United States President Joe Biden expressed opposition to a debt ceiling agreement with Republican leaders that would allegedly benefit crypto traders. The alleged protections for crypto traders refer to tax-loss harvesting. According to the Washington Post, there’s an ongoing discussion between the White House and Republican leaders about blocking that the mechanism for cryptocurrency transactions.
Crypto tax-loss harvesting is a strategy that investors use to reduce their overall tax liabilities. It involves selling a cryptocurrency at a loss to offset capital gains from crypto profit. To claim a loss, the assets must be sold, and the proceeds must be used to purchase a similar asset within 30 days before or after the sale. The mechanism is also available for stocks and other assets.
Texas proof-of-reserve bill passes through the Senate
Legislation that could require exchanges to maintain reserves “in an amount sufficient to fulfill all obligations to customers” has made it one step closer to becoming law in Texas. Texas House Bill 1666, amending the Texan finance code, passed through the state’s House of Representatives earlier this year. After three readings in the Senate, the text of the bill hasn’t experienced any significant changes from the previous draft.
Under the amendments, digital asset providers serving more than 500 customers in the state, with at least $10 million of customer funds, would be restricted from comingling the customer funds with any other type of operational capital, and using customer funds for any further transactions besides the original transaction demanded by the customer.
Montenegro prosecutors appeal against Do Kwon’s bail terms
Terra co-founder Do Kwon’s bail is now in question. The State Prosecutor’s Office in Montenegro’s capital Podgorica appealed against the previous decision of the court to grant Do Kwon and Han Chang-Joon a release from detention on bail of 400,000 euros ($436,000) each. Kwon and Chang-Joon were arrested by Montenegrin authorities in March 2023 at Podgorica airport for allegedly using false documents. The two previously had their passports confiscated in South Korea. In 2022, the Terra ecosystem created by Kwon and Terraform Labs imploded as its native TerraUSD (UST) stablecoin depegged, erasing an estimated $40 billion in market value in days.