Encryption Regulatory Dynamics Overview

Key Overview

• The U.S. Treasury Department and the IRS have delayed the reporting requirements for income from digital assets, which will be enforced after relevant regulations are issued.
• The U.S. Securities and Exchange Commission has expanded the definition of "dealer," which may cover certain encryption companies. These companies are required to register with the SEC and comply with federal securities laws.
• The U.S. Energy Information Administration has been authorized to conduct a temporary investigation into the electricity usage of certain encryption mining companies, planning to collect data monthly from February to July 2024.

U.S. Regulatory Dynamics

Commodity Futures Trading Commission ( CFTC )

• Accused a certain digital asset platform of defrauding customers of $2.3 million.
• Issue a warning to remind the public to be vigilant against scams related to AI and encryption assets.
• The CFTC chairman stated that federal legislation on digital assets in the cash market is "urgent."

Congress

• Multiple senators and representatives proposed a bill involving information sharing on illegal financial activities, accounting treatment for encryption asset custody, and more.
• Some members of parliament have written to regulators expressing concerns about issues related to digital payment applications and the regulation of non-securities digital assets.
• Wyoming senator is optimistic about the stablecoin legislation passed in the first half of this year.

Department of Justice

• Accusations of multiple crimes related to cryptocurrency, including exchange operations, SIM card hijacking, Ponzi schemes, etc.
• A commodities trading advisor has been sentenced to prison for manipulating cryptocurrency trading.
• An Indian citizen admitted to selling controlled substances on the dark web and agreed to forfeit $150 million in encryption.

Ministry of Finance

• Release a risk assessment report on money laundering and terrorist financing, emphasizing risks related to virtual assets.
• Implement new sanctions against Hamas, targeting the encryption currency transfer network associated with it.
• The Finance Minister urged Congress to legislate the regulation of stablecoins and the spot market for non-security encryption assets.

Securities and Exchange Commission ( SEC )

• Delay decision on Ethereum ETF proposals submitted by multiple institutions.
• Reached a settlement with multiple encryption companies regarding unregistered products, false statements, and other issues.
• The Financial Industry Regulatory Authority found that approximately 70% of communications related to encryption assets have potential violations.

International Regulatory Dynamics

• The EU has reached a preliminary agreement on a new anti-money laundering plan to strengthen regulation of encryption asset service providers.
• German police seized 50,000 bitcoins, worth a total of $2.17 billion.
• South Korea arrests executives of a cryptocurrency platform, suspected of stealing approximately $828 million in encryption.
• Thailand's regulatory agency has ordered a certain cryptocurrency exchange to suspend services for 15 days.
• The Bank of England and the Treasury have released a consultation document regarding the digital pound, committing to making privacy a core design feature.