Welcome to Law Decoded, your weekly summary of the main developments in the field of regulation.
There was some substantial good news for crypto last week, but the prevailing story remains FTX development. While the extradition of the failed exchange founder, Sam Bankman-Fried seemed quite logical since the beginning of the saga, last week, the 30-year-old received the first official call: The Texas State Securities Board (SSB) invited the former CEO to attend the hearing on the alleged sale of unregistered securities on February 2. SSB Enforcement Director Joe Rotunda hopes to get a cease and desist order from the judge during the hearing.
However, the man himself don't rush back to america, even for the invitation to the Congress. Bankman-Fried has indicated that he is not willing to testify before the United States Congress until he has "finished learning and reviewing what happened."
Meanwhile, the FTX crush continues to cause a ripple effect across the globe. In Singapore, Prime Minister Lee Hsien Loong and Deputy Prime Minister Lawrence Wong are ready to face questions for failing to protect retail investors. As Singaporean state-backed investor Temasek was one of 69 investors who invested in cryptocurrency 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, highlighted the failure of FTX stating that need for the second package of crypto regulations after the Markets for Crypto Assets (MiCa) came into effect. His colleagues on the US House Committee on Financial Services will also pay more attention to the FTX case. during the special hearing scheduled for December 13. And the Commodity Futures Trading Commission (CFTC) has already made one, answering the question "How did it happen?" questions its president Rostin Behnam as expected asked for more power to the Commission.
Brazil approves law to legalize cryptocurrencies as a payment method
And now the good news! The Brazilian Chamber of Deputies, a federal legislative body, has approved a regulatory framework that legalizes the use of cryptocurrencies as a payment method in the country. While the document will not generate Bitcoin (BTC) a legal tender as in El Salvador, will still include digital currencies and air mileage programs in the definition of payment methods that are under the supervision of the country's central bank.
In addition to designating cryptocurrencies as a method of payment, the law allows for the creation of licenses for cryptocurrency exchanges and for the custody and management of cryptocurrencies by third parties. In addition to this, the law will force exchange houses to make a clear distinction between company and user funds, to avoid another incident like the collapse of FTX.
Italy will 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. Included in his 2023 budget are plans to impose a 26% tax on profits over 2,000 euros ($2,062) earned in cryptocurrency trading. Historically, digital currencies have had lower tax rates because they have been considered "foreign currency." If the proposed bill becomes law, taxpayers will have the option to declare the value of their digital asset holdings starting January 1 and pay a 14% tax. This is intended to incentivize Italians to declare their digital assets on their tax returns.
South Korean judge dismisses arrest warrants for former Do Kwon associates
A Seoul Southern District Court judge has reportedly quashed the arrest warrants for Terra co-founder Shin Hyun-seong, along with three Terra investors and four developers. Judge Hong Jin-Pyo said there was little risk that evidence related to the case against the crypto firm would be destroyed by Shin or Terra associates. Do Kwon, who is also facing legal action in South Korea over his role in the company's collapse, is still unlikely to return to the country, according to local media.
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