The United States Internal Revenue Service (IRS) Issues New Regulations for Digital Asset Transactions
The United States Internal Revenue Service (IRS) has issued new regulations requiring brokers to report digital asset transactions, expanding on existing requirements to include platforms like decentralized exchanges (DEXs). This move is set to take effect in 2027 and will require brokers to disclose information about taxpayers involved in digital asset transactions. Additionally, the brokers will be required to report their gross proceeds from crypto and other digital asset sales.
What this means for Decentralized Exchanges (DEXs)
With the new rules, DEXs could be treated as brokers if they facilitate the exchange or sale of digital assets and exercise sufficient control or influence on the transaction process. This could have significant implications for the decentralized finance (DeFi) space, as it may require DEXs to comply with traditional broker regulations.
The Blockchain Association Sues the IRS
In response to the new IRS rules, the Blockchain Association and the Texas Blockchain Council filed a lawsuit against the IRS, arguing that the rules are unconstitutional. The organization argued that the rule violates the Administrative Procedure Act and risks crippling the digital asset space in the country.
Kristin Smith’s Statement
"We’re taking action and standing with the nation’s innovators to ensure the future of crypto and DeFi in the US," said Kristin Smith, CEO of the Blockchain Association. The organization is fighting against what they see as an overreach by the IRS and is determined to protect the rights of digital asset holders.
Turkey Introduces Stricter Crypto AML Regulations
Turkey has also introduced new crypto reporting rules to combat money laundering. Under the new regime, users transacting with more than 15,000 Turkish lira (approximately $425) must share their information with the country’s service providers. While bigger transactions are affected, the Turkish government said the new rule will not apply to crypto users transacting with amounts below the $425 threshold.
The New Rule in Turkey
The new rule is set to take effect on February 25, 2025. The Turkish government aims to prevent money laundering and ensure a safer environment for digital asset transactions within its borders.
Do Kwon’s Extradition to the US
Montenegro’s justice minister, Bojan Božović, has approved Do Kwon’s extradition to the United States after the country’s constitutional court dismissed his appeal. This decision follows a lengthy legal battle that saw extradition being reversed more than once. US and South Korean prosecutors have requested Kwon’s extradition to stand trial for offenses in their jurisdictions.
The End of a Long-Running Extradition Battle
The denial of Kwon’s appeal and the Ministry of Justice’s approval to extradite him to the US should mark the end of the longstanding legal proceedings related to his extradition. The outcome will have significant implications for the Terraform Labs co-founder, who has been at the center of a highly publicized controversy.
Hong Kong’s Stablecoin Bill Advances
Hong Kong’s much-anticipated bill on stablecoins has moved on to the next stage, with its first reading before the Legislative Council. The bill must go through three readings before finally making it to the chief executive, who can sign it into law. If signed into law, stablecoin issuers in Hong Kong will be mandated to obtain a license from Hong Kong’s central bank.
The Requirements for Stablecoin Issuers
Issuers must meet the Hong Kong Monetary Authority’s requirements to obtain the license. Before approving licenses, the regulator would evaluate the stablecoin, its issuer, controllers, reserve assets, and mechanisms for stabilizing its value. Only licensed stablecoin issuers will be allowed to offer stablecoins in the Hong Kong market when the law is enacted.
The Future of Crypto Regulations
As regulations continue to evolve around digital assets, it’s essential to stay informed about the latest developments. The Law Decoded newsletter provides the latest insights on crypto laws and guidelines, helping you make smart choices for your crypto ventures.
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