Decentralized Prediction Market Polymarket is Under CFTC Investigation: Report

Decentralized Prediction Market Polymarket is Under CFTC Investigation: Report

New York-based decentralized prediction market Polymarket is under the scrutiny of a top Wall Street regulator.

The Commodity Futures Trading Commission (CFTC) is investigating whether Polymarket is letting customers improperly trade binary options or trade swaps and if it should be registered with the agency, according to a Bloomberg report citing people familiar with the matter.

The firm, however, is not accused of any wrongdoing, and CFTC investigations do not always lead to enforcement cases.

“Polymarket is firmly committed to complying with applicable laws and regulations and to providing information to regulators that will assist them with any inquiry,” a spokesman for the firm said in response.

The company also has law firm Sullivan & Cromwell partner James McDonald handling the probe, who was head of the CFTC’s enforcement division until last year, Bloomberg said, citing sources.

Since launching last year, Polymarket has facilitated about 4 billion shares. Trades on the prediction market are made using the stablecoin USDC.

Amidst this, the company is in talks with investors on a new round of funding that would value it at about $1 billion. Last year, Polymarket raised $4 million in venture capital.

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Author: AnTy

The Biden Administration Proposes Tax on Unrealized Capital Gains With ‘Build Back Better’ Plan

The Biden Administration Proposes Tax on Unrealized Capital Gains With ‘Build Back Better’ Plan

Treasury Secretary Janet Yellen has proposed a tax on unrealized capital gains.

Speaking on CNN’s “State of the Union” over the weekend, Yellen said this new tax would be levied on the very wealthy.

“It’s not a wealth tax, but a tax on unrealized capital gains of exceptionally wealthy individuals.”

Capital gains tax incurs on the profit that investors realize on the sale of their assets. The current capital gains tax rate is up to 37% in the US, based on the asset type, the income of the investor, and the period of holding.

But now, the former Chair of the US Federal Reserve wants investors to pay a tax on the increase in value of an asset every year, even if it is not sold.

The Democrat administration in the US claims only to target the super-rich with this tax. Yellen explained,

“I wouldn’t call that a wealth tax. But it would help get at capital gains, which are an extraordinarily large part of the incomes of the wealthiest individuals, and right now escape taxation, until they’re realised, and often they’re unrealised in the death benefit from a so- called step up of basis.”

With this tax, the Biden administration is looking to fund a $3.5 trillion spending plan. Yellen first proposed the tax on unrealized capital gains earlier this year in February.

Since then, wealth managers like Howard Marks, who revealed in January that his family “owns a meaningful amount” of Bitcoin, have argued that this may lead to more investments in markets outside the US to escape the added tax. BTC 3.57% Bitcoin / USD BTCUSD $ 63,114.88
$2,253.203.57%
Volume 31 b Change $2,253.20 Open $63,114.88 Circulating 18.85 m Market Cap 1.19 t
6 h Crypto Can Eventually Replace the Dollar As “The Reserve Currency of the World,” says US Senator Rand Paul 8 h The Biden Administration Proposes Tax on Unrealized Capital Gains With ‘Build Back Better’ Plan 10 h Elon Musk Supports the “People’s Crypto” the Original Meme Coin DOGE, But SHIB is the One Dominating Binance and Coinbase

Crypto market participants also voiced out against this move by the Biden administration. Charles Edwards, the founder of Capriole Investments, commented,

“They know they can’t stop printing. They know increasing interest rates will break the economy. I expect to see more and more taxation plays in an attempt to control the debt balloon and hyperinflation.”

The tax would apply to those who make more than $100 million a year for three years in a row or $1 billion in annual income. Those impacted by the tax would be able to take a deduction if their assets plunge in value.

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Author: AnTy

Australia to Push for A Cryptocurrency Framework to Promote Innovation and Investment

Australia to Push for A Cryptocurrency Framework to Promote Innovation and Investment

The Parliamentary committee chairman reviewing digital assets’ use says they don’t want to “put a new coat on an old hook,” and he is hopeful that crypto will “break the back” of de-banking.

Australia’s crypto industry needs a robust policy and regulatory framework to compete with other global financial hubs, said the Select Committee on Australia as a Technology and Financial Centre in a draft report on Wednesday.

The parliamentary committee that’s reviewing the use of digital assets said that such a framework is needed to promote investment, provide a structure for innovation to thrive while protecting consumers and facilitating market competition.

The report recommends establishing a market licensing regime for crypto exchanges that would cover capital adequacy and responsible person tests, a clear framework for custody of digital assets with minimum standards, new company rules covering new projects in DeFi, and conducting a token mapping exercise to determine the best way to characterize the different types of tokens in Australia.

As for DAOs, the report notes that they do not fall within any of Australia’s existing company structures, with legal liability for them still “unclear.” It pointed to standards in Wyoming, US, as a potential template.

These recommendations are “a big push to detail a cryptocurrency framework for Australia,” said Andrew Bragg, a senator from the conservative Liberal Party and chair of the committee, in an interview. This, according to him, would allow them to compete with the U.K. and Singapore.

“What we don’t want to do is put a new coat on an old hook.”

“There’s a strong anti-competitive element in Australia where the incumbents don’t like innovation and their solution is to push new ideas into old regulatory frameworks that were designed for something else.”

Bragg also hopes that crypto will “break the back” of de-banking — a practice in which lenders close the account of clients they consider high risk. De-banking “is killing too many small Australian businesses — and we simply can’t afford that to happen,” he said.

A study last month found that over a third of all Australians under 50 either own or have owned crypto assets.

The former regulator further said that he wants these recommendations to be adopted as policy in the coming months to be legislated after the federal election early next year.

“We want to be a world-leading jurisdiction for cryptocurrency,” he told the Financial Times.

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Author: AnTy

NYAG Now Goes After Crypto Lenders, Nexo Says It Doesn’t Offer Services In New York Anyway

NYAG Now Goes After Crypto Lenders, Nexo Says It Doesn’t Offer Services In New York Anyway

After settling charges with Tether and Bitfinex for $18.5 million, the New York State Attorney General has now asked two cryptocurrency lending platforms to cease activities in New York. Three other platforms have also been directed to provide information about their business.

In a redacted letter, Letitia James said the Office of the Attorney General “was in possession of evidence of unlawfully selling or offering for sale securities and/or commodities.”

Crypto lending platforms that are interest-bearing accounts offering investors a rate of return on crypto deposits are required to register with the Office of the Attorney General (OAG) if they are operating within the state or offering their products to New Yorkers said James on Monday. She added,

“Cryptocurrency platforms must follow the law, just like everyone else.”

The two companies are reportedly Celcisus and Nexo. Celsius Network is already targeted by Texas, Kentucky, Alabama, and New Jersey regulators for its interest-bearing accounts, which the local regulators allege violate local securities laws.

This month, the company with over 1 million registered users and $25 billion in assets under management raised $400 million from equity firm WestCap and Canada’s second-largest pension fund Caisse de dépôt et placement du Québec, at a valuation of $3 billion.

Nexo Finance took to Twitter to clarify that it already restricts access to its Nexo Exchange Service and Nexo Earn Interest Product to the citizens or residents of the States of New York, Texas, Kentucky, New Jersey, Alabama, Oklahoma, Arkansas, and Washington, as such the letter doesn’t make any sense.

“Nexo is not offering its Earn Product & Exchange in NY so it makes little sense to be receiving a C&D for something we are not offering in NY anyway.” “But we will engage with the NY AG as this is a clear case of mixing up the recipients of the letter. We use IP-based geoblocking.”

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Author: AnTy

Digital Currencies Reduce “Efficacy” of American Sanctions, says Treasury Department

Digital Currencies Reduce “Efficacy” of American Sanctions, says Treasury Department

The Biden administration is now warning that cryptocurrencies pose a threat to the sanctions program of the US and calls for modernizing how sanctions are deployed and using a more multilateral approach to them so that they remain an effective tool.

In a report published Monday, the Treasury Department said that their adversaries are increasingly turning away from the US dollar to facilitate their transactions amidst the rise of cryptocurrencies which it feels can erode the power of American sanctions. The US has over 9,000 sanctions in place.

“Technological innovations such as digital currencies, alternative payment platforms, and new ways of hiding cross-border transactions all potentially reduce the efficacy of American sanctions.”

“These technologies offer malign actors opportunities to hold and transfer funds outside the traditional dollar-based financial system.”

The seven-page report didn’t offer much detail about the Treasury’s plans, but a senior Treasury official said that one important measure to prevent this evasion of sanctions could be greater coordination with other countries. This would make it more difficult for cryptocurrencies to be converted into government-issued money, the official added.

“We are mindful of the risk that, if left unchecked, these digital assets and payments systems could harm the efficacy of our sanctions.”

The Biden administration is also targeting stablecoin and is prepared to issue a separate report on stablecoins this year. It is actually looking to regulate stablecoin issuers as banks. The Financial Stability Oversight Council is also meeting later in the week to get an update on the President’s Working Group’s pending report on stablecoins.

Meanwhile, a cryptocurrency lobby group told US regulators that asset-backed stablecoins do not pose a systemic risk to the US financial system and should not face a new set of rules.

The Washington- based Chamber of Digital Commerce said in a letter that retail-focused stablecoins pegged to the dollar should not be subject to a new set of rules “simply because new technology is being deployed.”

Stablecoins are “not at significant scale to merit a separate, compulsory regulatory regime,” it said, adding that instead of treating them as investment products, they should be treated like other retail-focused digital payment tools.

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Author: AnTy

Estonia‘s Head of AML Agency Proposes a 28x Increase in Minimum Capital Requirement for Crypto Firms

Estonia‘s Head of AML Agency Proposes a 28x Increase in Minimum Capital Requirement for Crypto Firms

Estonia’s head of anti-money laundering government agency wants to scrap its current crypto regulations and start afresh. Up until now, Estonia has been a crypto-friendly jurisdiction, but that could soon change.

Estonia should “turn the regulation to zero and start licensing all over again,” the Financial Intelligence Unit (FIU) chief Matis Mäeker, who was appointed in May this year, told a local news outlet.

Mäeker explained that crypto companies had made “tens of billions of euros per year,” but instead of helping the Estonian economy, it has moved to other countries “Their only goal is to get an Estonian license and use it to turn over very large sums, while Estonia gets nothing out of it,” Mäeker said.

The chief has proposed stricter rules for licensing crypto startups and raising the minimum capital requirements from €12,000 (US$13,900) to €350,000 ($405,000).

A bill proposing regulations for crypto licenses will also be introduced in the Estonian parliament, Mäeker said. In the meantime, he called for existing licenses to be revoked.

Last year, the FIU revoked 1,808 cryptocurrency licenses, and currently, there are 400 licenses in Estonia.

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Author: AnTy

Crypto Regulation Should Be “Pursued As A Matter Of Urgency,” Says BoE Governor

Cryptocurrency Regulation Should Be “Pursued As A Matter Of Urgency,” Says BoE Governor

The collapse of crypto “is certainly a plausible scenario,” says Jon Cunliffe due to “the power of herd behaviour,” as one of the reasons, much like the $1.2 trillion sub-prime market.

Bank of England (BoE) Governor Jon Cunliffe says a collapse in cryptocurrencies is a “plausible scenario” and that it requires rules to regulate the fast-growing sector as a “matter of urgency.”

In a speech to the SIBOS conference on Wednesday, Cunliffe said, while risks to the financial stability from crypto are currently limited, there are a number of “very good reasons” to think this wouldn’t be the case for much longer.

“Regulators internationally and in many jurisdictions have begun the work. It needs to be pursued as a matter of urgency.”

The Governor pointed to the largely unregulated crypto industry growing to become a $2.47 trillion market, with the majority of them not backed by any asset or fiat currency.

“But as the financial crisis showed us, you don’t have to account for a large proportion of the financial sector to trigger financial stability problems,” Cunliffe said, referring to $1.2 trillion of U.S. mortgage market subprime — “a relatively small market” — whose collapse in 2008 reverberated through an unresilient financial system, leading to a global banking crisis.

Now, Cunliffe sees the potential of something like this happening in crypto.

“Such a collapse is certainly a plausible scenario, given the lack of intrinsic value and consequent price volatility, the probability of contagion between crypto assets, the cyber and operational vulnerabilities, and of course, the power of herd behaviour.”

He also pointed to the growing connection between the crypto market and the traditional financial system as hedge funds, banks, and big investors become more involved. Not to mention the recording and transferring ownership of assets is the “bedrock of the financial system’s role in storing value and in making transactions,” which crypto allows without the banks or custodians.

“When something in the financial system is growing very fast, and growing in largely unregulated space, financial stability authorities have to sit up and take notice.”

He also said the unregulated, decentralized finance (DeFi) presents “pronounced” challenges due to the absence of investor protection. The BoE has begun the work on how to manage such risks, he added.

Last week, global regulators proposed applying the same principles to stablecoins followed by banks and payment systems. Cunliffe, who helped lead the work on the safeguards, said it took two years to draft the measure.

“Indeed, bringing the crypto world effectively within the regulatory perimeter will help ensure that the potentially very large benefits of the application of this technology to finance can flourish in a sustainable way.”

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Author: AnTy

Russia has No Plans to Ban Crypto Unlike China, says Deputy Finance Minister

Russia Has No Plans to Ban Cryptocurrencies Unlike China, says Deputy Finance Minister

A Siberian region, which relies heavily on hydroelectric power and is known for its cheap electricity, also saw its energy consumption surging 159% due to an “avalanche” of crypto-mining.

After the US Federal Reserve Chairman Jerome Powell and US Securities and Exchange Commission (SEC) Gary Gensler clarified in no uncertain terms that they have no plan to ban Bitcoin and cryptocurrencies, Russia’s Deputy Finance Minister Alexei Moiseev conveyed the same thoughts.

Moiseev told reporters this week that Russia does not plan to follow the same path as China and introduce a ban on the purchase of crypto by citizens on foreign exchanges, according to a local publication.

“Russian citizens can have a wallet open outside the Russian Federation, but if they operate within the Russian Federation then they will be subject to bans, I think, for the entire foreseeable future, due to our financial sovereignty,” said Moiseev during a “Digitalization of Financial Markets” lecture at MGIMO.

Last month, China strengthened its crackdown on crypto mining and trading; as a result, a flood of Bitcoin miners are now also moving to Russia besides Kazakhstan and the U.S.

A Siberian region, Irkutsk, which relies heavily on hydroelectric power and is known for its cheap electricity, saw retail energy consumption surging 159% this year, from 2020 levels due to an “avalanche” of underground crypto-mining, Governor Igor Kobzev said in a letter to Russian Deputy Prime Minister Alexander Novak.

“The situation is an unpredictable event for the region and is leading to significant loads on the power grid with the risk of accidents and emergencies,” reads the letter, in which Kobzev said the problem has been exacerbated by China’s ban on mining and called for higher electricity rates for miners.

Close Attention on Crypto

While no plans to ban crypto, the digital currency will not be allowed to be used as a means of payment within the country, as this could result in the loss of the government’s control over the money supply, said Deputy Finance Minister.

Moiseev further said that there is a need to define digital currency and blockchain in the country’s Civil Code and in specialized laws.

“The blockchain will obviously occupy its own niche and will be used where equal rights are needed.”

Last week, Anatoly Aksakov, the head of the State Duma Committee on the Financial Market had said that they are keeping “close attention” on the topic of digital assets and thinking about implementing legislative restrictions on the investment of unqualified investors in cryptocurrencies.

These measures, according to him, are necessary to protect private investors as billions of dollars are currently spent on the purchase of digital currency. But while there is a great risk, there is also great profitability, he noted.

“Here, of course, we need to prescribe in the legislation the norms that will protect an unqualified investor in ill-considered investments in digital currencies.”

In July this year, the Central Bank of the Russian Federation issued an information letter recommending Russian exchanges not to admit instruments linked to crypto and advised professional participants in the securities market to refrain from offering their unqualified clients access to crypto and the management company to include them in mutual funds.

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Author: AnTy

SEC COMM: Crypto Projects Shouldn’t Be Able To Raise Money “More Cheaply And With Fewer Burdens”

SEC Commissioner Says Crypto Projects Shouldn’t Be Able To Raise Money “More Cheaply And With Fewer Burdens”

Caroline Crenshaw is not in full support of the safe harbor proposal for crypto rather insists on building a bridge where “market participants accept proactive responsibility for compliance.”

In her speech on “Digital Asset Securities – Common Goals and a Bridge to Better Outcomes,” Commissioner Caroline Crenshaw, who “sometimes read(s) Crypto-twitter,” is calling for a meaningful exchange of ideas between innovators and regulators.

Digital assets, which represent a “small but growing portion of the economy,” are evolving rapidly, but few such projects have gone through the registration process, she said on Tuesday.

Talking about safe harbors, as one of the suggested paths to regulation, Crenshaw said she is not in complete favor of it.

SEC Commissioner Hester Peirce, aka ‘Crypto Mom,’ is the one who first introduced the concept of Safe Harbor for crypto last year and then introduced proposal 2.0 this year. Last week, Peirce spoke at the Texas Blockchain Summit, where she called government regulators to set clear rules that respect the unique attributes and challenges of life on the crypto frontier.

Meanwhile, fellow commissioner Crenshaw said she sees merit in aspects of the safe harbor proposal involving projects providing the names and biographies of team members. While honest disclosures of a development team is a necessary step in an industry “that promotes transparency,” it is not sufficient, according to Crenshaw, as the projects in exemption proposals grapple with unique characteristics — network effects, and the project’s choice to use a token with speculative profit potential to raise funds.

“I remain a bit skeptical that projects can only generate sustainable and valuable network effects primarily from profit-seeking investors, rather than people who actually want to use the network as designed.”

Additionally, granting a special exemption to projects raising capital by selling tokens “would provide unfair advantages to blockchain-related businesses and disadvantage everyone else.” Crenshaw is simply “not convinced” that crypto projects “should be able to raise money more cheaply and with fewer burdens.”

Crenshaw argues that a safe harbor during the ICO boom of 2017 and 2018 would have been “even worse” for investors and markets.

Instead of a harbor, she advocates for a bridge where “market participants accept proactive responsibility for compliance.”

While Crenshaw does “not think there has been a lack of clarity from the SEC,” she also acknowledges that it is not simple for developers to employ digital asset securities in new blockchain network applications in a compliant manner.

She wants crypto businesses to come to the SEC and talk to them about “why some exemption is appropriate.”

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Author: AnTy

Binance, OKEx, and Gate Kicks Out CNY & Existing Users, WeChat Blocks Searches, Mining Falls to Zero

China Update: Binance, OKEx, and Gate Kicks Out CNY & Existing Users, WeChat Blocks Searches, Mining Share Goes to Zero

Leading cryptocurrency exchange Binance announced on Wednesday that it is delisting the CNY trading zone, starting Dec. 31, 2021, in response to the regulatory requirements of the local government.

The exchange also said that it would also stop providing services to users in mainland China. Binance said it would “conduct an inventory of platform users,” and those from mainland China will have their accounts switched to the “withdrawal only” mode. It will notify the users by email seven days in advance.

Users based in China are now only able to withdraw, withdraw, redeem, and close positions.

Binance further said that they already withdrew from the Chinese mainland market in 2017 and do not engage in exchange business there.

“Binance has always attached great importance to compliance obligations and has always strictly complied with the relevant requirements of local regulatory agencies.”

Binance’s native token is unaffected by the news, trading at $460, up over 17.5% in the past 24-hours due to the announcement of a $1 billion incentive program to grow the Binance Smart Chain ecosystem on Tuesday.

Following Binance, another big crypto exchange OKEx issued a statement. Like Binance, OKEx said it has not been engaging in the Chinese market since 2017, and their site isn’t accessible in mainland China either.

“OKEx will continue to develop steadily in the international market, continuously improve its products and services, continue to maintain the policy of “exiting the Chinese mainland market,” and not set up offices and teams in mainland China.”

OKEx’s OKB token saw some fluctuation on the back of the news as it first went down to $15.14 from $16.44 only to spike to $16.89. As of writing, OKB is trading just under $16.

Another exchange Gate.io announced that it has blocked access to its website and removed its App from mainland China in response to local government regulatory policy requirements.

“In order to ensure the normal use and access of international users, Gate.io will normally provide legal and compliance services outside of mainland China,” said the exchange.

The same day, China’s largest social media platform WeChat blocked search results from the likes of “Binance” and “Huobi.”

After search engine Baidu and Twitter-like social media platform Weibo blocked searches for crypto exchanges in June, WeChat has also joined them by showing “no more results” to searches for them through existing articles to the exchanges are still accessible.

Amidst all this, China’s mining share after the ban has tanked, and the US has taken the lead.

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According to Cambridge Alternative Finance Center data, China’s share of global hash rate has fallen from 44% in May to zero. Two years back, China was accounting for a whopping 75.5% of the share. At the time, the US’s share was a mere 4.1%, which has grown to 35.4%.

During this time, Kazakhstan’s share increased significantly — 16.7% to achieve 18.1%; meanwhile, Russia’s share rose 5.3% to reach 11.2%. Canada also recorded significant growth going from 0.6% in June 2020 to 10.8% in July 2021.

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Author: AnTy