Crypto Regulation Updates: Tax Disclosures, Ongoing Investigations and Future Licenses Worldwide
Summary:
UK's HMRC urges citizens to report any undeclared cryptocurrency holdings from the past two decades, with a penalty for late payments. Spain also reminds local crypto holders to declare their assets, especially those stored in foreign countries. Meanwhile, Brazil plans to tax citizens' overseas cryptocurrency assets starting 2024. In the United States, the SEC's scrutiny of Binance.US's potential misappropriation of customer assets continues. Voyager Digital settles $1.65 billion with the FTC, and despite preparing for bankruptcy, it is allowed to compensate users with an initial 35.72% of their claims. Lastly, South Africa's FSCA processed 128 applications from digital asset service providers, yet only 36 will be deliberated in an upcoming meeting.
In a surprising move just before Christmas, the UK's tax enforcement entity known as Her Majesty’s Revenue and Customs (HMRC) requested citizens to report any undeclared cryptocurrency assets from the last 20 years. The agency also mentioned that applicable interest is required from the exact date the tax was due. As there is a penalty for late tax payments on earlier cryptocurrency holdings, the accruing interest will be automatically presumed. Any accounts that fail to acknowledge the correct interest amount will face a rejection of their tax disclosure. After unpaid taxes have been registered, individuals will receive a specific reference number for the payment due, which must be made within 30 days. Cryptocurrency assets such as Bitcoin, nonfungible tokens, and “utility tokens”, need to be reported.
The Spanish Tax Administration Agency, less strict in its requirements, reminded crypto holders of their tax obligations, irrespective of where the assets are stored. By using Form 721, the Tax Administration Agency established the submission period from the beginning of the year until the end of March. This, however, only applies to those whose balance sheets exceed the equivalent of €50,000 in digital assets who are then required to declare their overseas cryptocurrencies. Cryptocurrencies stored in personally controlled wallets will submit reports via wealth tax Form 714.
Similarly, Brazil will tax its citizens' overseas cryptocurrency holdings under a bill that is anticipated to receive President Luiz Inácio Lula da Silva's approval. The bill indicates that Brazilians earning more than BRL 6,000 ($1,200) on foreign exchanges will be eligible for taxation from the start of 2024, following domestic funds' tax rules. Accessing funds earned before that date would also be subject to tax, with an 8% tax rate imposed on funds accessible before Dec. 31.
Scrutiny from the United States Securities and Exchange Commission (SEC) continues against Binance.US. The SEC is investigating whether Binance.US had access that could potentially manage customer funds similar to FTX. Although a $4.3 billion settlement with US authorities involved Binance and former CEO Changpeng Zhao pleading guilty to violating U.S. money-laundering laws, it did not include the SEC's fraudulent activities claims from a lawsuit filed in June. However, Judge Zia Faruqui who is overseeing the Binance and SEC case reportedly stated that the admissions of guilt make asset misappropriation less likely on the part of Binance.US and Zhao.
Voyager Digital has agreed to a $1.65 billion settlement with the Federal Trade Commission (FTC), as approved by a federal judge. Voyager is prohibited from marketing or offering any services or products relating to digital assets as part of the agreement. Despite the order, Judge Gregory Woods indicated it would minimally impact Voyager's bankruptcy procedures. The company filed for Chapter 11 protection in July 2022 with liabilities ranging from $1 billion to $10 billion. Voyager previously received court approval to provide 35.72% of user claims from the company initially.
Finally, by the end of 2023, 36 firms may secure licenses to operate in South Africa. The Financial Sector Conduct Authority (FSCA), the principal financial regulator in South Africa, has assessed 128 applications from digital asset service providers, however, only 36 are scheduled for discussion during its upcoming Licensing Executive Committee meeting on Dec. 12. Further hearings are set for the remaining 36 in February and March.
Published At
12/4/2023 8:00:00 PM
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