Thursday, May 26, 2022

Recap of Blockchain Week in March 2022

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What is blockchain?

A blockchain is a method of storing information so that it is difficult or even impossible to edit, hack, or trick the system. A blockchain is a decentralized digital record of transactions that is replicated and dispersed across the blockchain’s complete network of computer systems.

Blockchain
Blockchain

These are the weekly blockchain records for the weeks in March;

The week of March 5th

Gary Gensler, the candidate for chairman of the Securities and Exchange Commission, speaks before the Senate Banking Committee.

The Senate Banking Committee held a conference on Gary Gensler’s nomination to chair the Securities and Exchange Commission. The hearings covered many themes, including political spending, climate dangers, blockchain technology, and recent GameStop stock controversies.

Gensler lauded cryptocurrencies for driving financial innovation and accessibility while emphasizing the importance of balancing any breakthrough with investor protection. Speaking specifically about Bitcoin, he claimed that it was a commodity whose definition was left up to the Commodity Futures Trading Commission (CFTC) or Congress. He left things to chance for those other cryptocurrencies to be in a similar situation. This is a carryover from the present regulatory structure, which, as Gensler pointed out, gives the SEC jurisdiction over investment contracts rather than cryptocurrencies in general. Gensler spoke about balancing investor protection, innovation, and capital generation. Gensler has experience as a former CFTC head and is now a professor of technology and finance at MIT.

The written testimony of Gensler is available here. As of March 5, 2021, the Senate Banking Committee had not voted on his nomination.

The New York Attorney General releases industry alerts outlining the risks in bitcoin investments and underlining the need for industry members to register.

New York Attorney General Letitia James released two industry alerts and a two-part press release for cryptocurrency speculators and industry members on March 1, 2021.

Investors were advised to use “extreme caution” while investing in virtual currencies, citing dangers such as price fluctuations, conflicts of interest, price manipulation, embezzlement, and tax evasion. In addition, a supplementary investor alert with “5 common sense suggestions” to avoid scams connected to the Investor Protection Bureau’s formal complaint accompanied the press release.

The advisory to industry members cited provisions of the Martin Act, a New York State legislation concerning securities and commodities that provides the attorney general’s office with responsibility for protection and commodity markets in New York. In addition, the attorney general mentioned a registration system for some materials broker-dealers, sales representatives, or investment advisors, stressing that an inability to register carries both civil and criminal consequences.

The Appellate Division decision in James v. iFinex, issued on July 9, 2020, would include language declaring that the Martin Act definition of a consumer good was broader than that used by the CFTC, even while stating that Tether, and most likely a large variety of cryptocurrencies, fall only within the Martin Act definition of a commodity. The attorney general’s office referenced the ruling as mandating registration of certain cryptocurrency broker-dealers, sales representatives, or investment advisors while noting “serious noncompliance with registration responsibilities.”

Kings of Leon’s next album will be released as an NFT.

Today, the band Kings of Leon announced the launch of its forthcoming album and three different kinds of NFT tokens with varying rewards. According to the block, The first kind of token will also be a special album bundle, the second will provide holders with benefits such as lifetime front-row seats, and the third would be for “audiovisual art.” YellowHeart, a blockchain firm, is in charge of the technical release, including smart contracts.

The Kentucky legislature has approved cryptocurrency mining incentive legislation.

House Bill 230 was approved by the Kentucky General Assembly on March 3, 2021, by 82-15. This measure would repeal the sales tax on electricity and tangible private possessions used directly for commercial cryptocurrency mining. The bill was introduced in the Senate on March 4, 2021, and will be debated with Senate Bill 255. This legislative proposal aims to attract commercial bitcoin mining facilities by noting a “potential to be a national leader in [a] new industry,” notably mentioning cheap and plentiful electricity. Similar incentives are also included in the legislative plan for technology-focused businesses, such as network infrastructure.

This comes on the heels of a 2019 Kentucky House Resolution requesting a comprehensive investigation of the usage of blockchain and a 2020 Senate Bill establishing a Blockchain Technology Working Group in Kentucky.

The Internal Revenue Service specifies and limits the virtual currency declaration question on Form 1040.

The IRS revised Form 1040 in December 2020 to include the first question, “Did you receive, sell, or otherwise obtain any monetary stake in any virtual currency during 2020?”

The IRS revised its frequently asked questions on March 2, 2021, to emphasize that simply obtaining and storing virtual currency doesn’t necessitate disclosure. Stating

2020 (Question 5) Form 1040 asks if I received, sold, sent, swapped, or otherwise obtained any financial interest in just about any virtual currency during 2020. In 2020, I bought virtual currency using real money and did not make any further virtual currency purchases that year. Is it necessary for me to say “yes” to the Form 1040 question? (3/2/2021)

Answer 5. No, you would not need to respond “yes” to the Form 1040 question if your only transactions using virtual currency in 2020 were acquisitions of virtual currency with actual money.

Moving the tax issue to 1040 and placing this as the first topic makes it harder for filers to overlook. This FAQ update narrows the focus of the inquiry to exclude merely buying and retaining.

The week beginning March 28th.

Zelenskyy Signed Virtual Assets Legislation Into Law, Making Crypto Legal in Ukraine.

Ukrainian President Volodymyr Zelenskyy signed the Law on Virtual Assets on March 16. According to the Ministry of Digital Transformation, this law establishes the legal status, categorization, possession, and regulation of virtual assets and regulatory standards for service providers. Ukraine’s National Commission on Securities as well as the Stock Market are in charge of regulating the market, in which international and Ukrainian crypto exchanges can now operate lawfully, and banks can register accounts on their behalf. Zelenskyy had already voted against a previous measure model, which had been authorized in September 2021.

Ukraine recently received an additional $100 million in cryptocurrency donations from those wishing to support defense and humanitarian operations during the country’s conflict with Russia.

Japan Imposes Sanctions on Crypto Exchanges for Violations of Russia’s Sanctions.

According to Reuters, Japan’s Monetary Administrators Company and Ministry of Finance released a joint statement on March 14 outlining penalties crypto exchanges may face if they fail to respond to Russian sanctions. Discussions transferring unlawful cash to sanctioned individuals may be fined up to 1 million yen ($8,500), and executives may face up to three years in prison. Exchanges are also required to notify any suspected instances of such transfers.

Until now, opinions have fluctuated on whether or not to bar Russian addresses from using their services altogether.

The SEC Denies NYDIG and Global X’s Spot Bitcoin ETF Proposals.

The Securities and Alternate Fee rejected two-point bitcoin exchange-traded funds at the forefront of discussion by NYDIG and Global X on March 10. Regulatory filings, like previous scheme objections (e.g., First Trust and Skybridge, VanEck, and WisdomTree), noted a lack of surveillance-sharing agreements and the anticipated inability to limit fraud and manipulative behavior. The Block provides security.

Bipartisan Support for Biden’s Crypto Executive Order

On March 9, President Joe Biden issued a broad directive—the “first-ever whole-of-government approach” to digital property that directs federal agencies to synchronize their efforts in developing guidance for the fast-growing industry.

The executive order, which calls for coordinated interagency action and communication, states that the administration now places the highest priority on analysis and growth attempts in the future design and deployment of options of a United States CBDC (as well as further calls for evaluation of both the potential risks and benefits).

In less than three months from the order, “the Secretary of the Treasury, in collaboration with the Secretaries of State, the Attorney General, the Secretary of Commerce, the Secretary of Homeland Security, the Board member of the Workplace of Administration and Finances, the Board member of Nationwide Intelligence, and the chief executives of various affiliated businesses, needs to submit to the President a report on the way forward for money and fee methods, together with the circumstances that drive widespread adoption of the divisible currency.”

Various reviews are due in less than 180 days, such as a report “providing additional perspectives on black money dangers posed by the digital property, including cryptocurrencies, stable coins, CBDCs, and trends in the use of digital information by illicit actors,” which can then be saved and branded as being due in 90 days.

Sen. Pat Toomey (R-Pa.), a member of the Senate Banking Committee, was inspired by the administration’s recognition of the sector and its development.

Rep. Patrick McHenry (R-NC), the House Homeland Security Committee’s ranking member, is well-known for his bipartisan ideas on digital property regulation.

While McHenry disputed suggestions that Russian oligarchs could use cryptocurrencies to circumvent prohibitions, Senator Elizabeth Warren (D-Mass. ), a representative of the Senate Banking Committee, urged the Treasury Department to clarify how cryptocurrency could be prevented from being used to avoid such sanctions.

In the fourth quarter, crypto apps surpassed 100 million downloads.

According to a survey released on March 17, the last three months of 2021 saw more than 100 million downloads of cryptocurrency applications such as Coinbase, Crypto.com, Binance.US, Binance, and Voyager. These apps enable mainstream buyers to collaborate with blockchains and manage their holdings in a far more straightforward manner than the “wallet,” most popular among savvy clients.

Downloads increased 400% over the previous year in 2021. (This contrasts with the expected growth rate of 64% in 2020). In addition, the number of periods increased by 567 percent, surpassing 4 billion in the fourth quarter.

Sensor Tower’s top five app installations are down in early 2022 compared to the previous quarter, but they are still up 770 percent over January and February of 2020.

Thus, according to Sensor Tower, crypto apps took three of the top five rankings for the most increased compared to the previous week amongst mobile-first firms advertising through the Tremendous Bowl in February. AXIOS provides security.

A committee of the European Parliament votes against a ban on proof-of-work and supports an alternative proposal on crypto assets.

The EU’s Committee for Financial and Navy Affairs (ECON) considered the proposed Markets in Crypto Assets (MiCA) framework, which includes a change barring proof-of-work blockchains like Bitcoin. According to a series of tweets by Patrick Hansen, head of the methodology at Unstoppable Finance, the committee ultimately voted in favor of “the POW ban,” with 23 members voting in favor, 30 opposed, and six abstaining. Your MiCA draft received 31 votes, four votes opposed, and 23 abstentions. The results of the amendment voting can be viewed here.

Hansen said that the teams in favor of the POW ban had one final option: “veto a high-speed process of MiCA through the trilogues [and] communicate the dialogue to the session of the Parliament,” for which they would need, and currently appear to have, one-tenth of the majority in the EP.

Bitcoin supporters expressed fear that such a prohibition would negatively affect Bitcoin. As per Jake Chervinsky, Government Vice President and Head of Coverage at Blockchain Association, the ban is “a pretext for a bitcoin ban,” and “if they succeed in banning POW, they’ll come for POS [proof-of-stake] next, and every other Sybil-resistant mechanism after that.”

Another amendment proposed by member Stefan Berger, which received support and was approved by the European Parliament, states: “By 1 January 2025, the fee shall be up to date to the European Parliament and the Council, as about a parliamentary proposition to modify Regulation (EU) 2020/852, in line with Article 10 of that Regulation, to include any crypto-asset mining activities that contribute significantly to the EU sustainable finance taxonomy.”

Disclosure

These are purely the opinions of the author based on observations and analysis of financial platforms. And a study of public reviews and ratings on the weekly recap of Blockchain in March 2022. Excerpts from various sources have been used to clarify the facts in this article. A glossary of all the sources used can be found at the end of the article. This article is for educational purposes only and is not financial advice.

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