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French lawmakers have adopted an amendment to the 2019 budget bill that will cut capital gains tax on bitcoin sales to 30 percent from 36.2 percent. This will bring cryptocurrency transactions in line with other non-real estate assets, which are taxed at a flat rate of 30 percent.
Amendment Awaits Approval by Parliament
The budget amendment was adopted by a finance commission in France’s lower house of parliament, a Reuters report said. But it must first be approved “in the final version of the budget bill by the broader parliament in order to become law.” If approved, the new tax will come into force in January.
At one point, cryptocurrency taxes in Europe’s third largest economy reached 45 percent. In April, however, the Council of State said that gains generated from digital assets were to be considered as capital gains of movable property. That meant a significant slash in the tax rate, with the exception of earnings from cryptocurrency mining, which are taxed as non-commercial profits and income resulting from professional activity that is taxed as industrial and commercial profits.
Under president Emmanuel Macron, France is trying to transform itself into a haven for business, including the business of cryptocurrency. Earlier this year, Macron launched the Action Plan for Business Growth and Transformation (PACTE) which, among other things, aims to make it easy for companies to operate in France, and to lay out legal guidelines for fund raising via token sales.
In September, the French parliament passed a law setting out guidelines for initial coin offerings. Announcing the new legislation, finance minister Bruno Le Maire said at the time that the legal framework enables the French financial regulator Authorité des Marchés Financiers (AMF) to approve and issue permits to businesses intending to float ICOs in France – but only if “those projects provide specific guarantees for investors.”
Issuers will be expected to give full disclosure to the AMF, allowing buyers to make informed decisions about the ICO in question. The French regulator has previously raised concern over the lack of clear regulation on token sales “as an inherent risk factor of ICOs,” heightening the possibility of loss, money laundering and terrorist financing.
What do you think of the French government’s approach to cryptocurrency? Let us know in the comments section below.
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Russian lawmakers have dropped the term “mining” from a bill to regulate digital assets, following the earlier removal of references to “cryptocurrency.” In addition, the proposed legislation no longer covers the taxation of mining profits, as such matters will fall under the oversight of the Federal Tax Service.
State Tax Authority to Determine
Taxes on Mining Profits
Anatoly Aksakov, head of Russia’s parliamentary Financial Market Committee, announced the latest amendment to the bill, which is expected to regulate Russia’s growing crypto industry, on the sidelines of Finopolis 2018. Roughly 1,500 people participated in the annual event, which is held by the Bank of Russia. Attendees included government officials and representatives from domestic and foreign companies in the financial and IT sectors.
Aksakov said that the long-awaited bill, “On Digital Financial Assets,” will not resolve lingering questions about the taxation of profits generated by cryptocurrency mining companies, the number of which increased by 15 percent in the first half of this year. Rather, the Federal Tax Service will have to decide on its own whether it will tax such operations. According to Aksakov, it would not make any sense to refer to mining in the revamped bill, given that it no longer includes any mention of cryptocurrencies. The proposed legislation is scheduled for a second reading in the State Duma following public discussions later this fall.
This past spring, three bills were filed in the lower house of Russia’s parliament to establish comprehensive rules and regulations for digital assets, the fintech industry and related sectors such as cryptocurrency mining. However, Russian lawmakers have struggled to synchronize the different legal terms used in the bills. After adopting them on first reading, they decided to postpone the final votes for the fall session. In the meantime, the drafts have been compiled into a single legal framework that differs significantly from the original versions.
Few Options on the Table
The decision to remove references to “mining” in the draft follows earlier reports that lawmakers had dropped the term “cryptocurrency” from the merged bill. Previously, the law had defined “mining” as the process of creating cryptocurrency, as well as the practice of rewarding entities for validating cryptocurrency transactions. Mining was also recognized as an economic activity that could be performed by both companies and individual entrepreneurs, meaning it would be subject to taxation when an operation’s electricity consumption exceeds certain limits.
However, Aksakov noted that Russian officials are no longer thinking about integrating cryptocurrencies into the national economy. “Since we decided we don’t need them, mining is not needed either,” Interfax quoted him as saying.
Other reports suggest that Moscow plans to regulate the crypto space in cooperation with the Financial Action Task Force, which is soon expected to present a new set of anti-money laundering standards for cryptocurrencies. Aksakov’s comments came after President Vladimir Putin’s special representative for digital and technological development, Dmitry Peskov, justified the decision to wait for the new standards to be released, pointing to the high risks associated with the nascent cryptocurrency sector. Peskov also recently claimed that the cryptocurrency market is evolving much more quickly than the government can write new laws, and hinted that Moscow might not even adopt comprehensive legislation for the sector at all.
If anything, the comments of both officials betray their limited knowledge about cryptocurrencies and the industry that has evolved around them. In truth, very little has changed in regard to the core principles that underlie cryptocurrencies. A decade after the creation of Bitcoin, cryptocurrency is still seen as a decentralized, electronic form of money that can be transferred on a peer-to-peer network. Most politicians fail to understand these principles and the mechanisms like mining that underpin cryptocurrencies.
Within this context, the Russian authorities actually have a limited set of options. The centralized state needs to control what’s entering the borders of the “sovereign democracy” built under Putin. Following in the footsteps of China, however, is not what some influential business players want. In contrast to the state-sponsored draft legislation, an alternative bill proposed by the Russian Union of Industrialists and Entrepreneurs not only mentions cryptocurrency, but also grants it special status.
What are your expectations about the future of the crypto space in Russia? Let us know in the comments section below.
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The European Parliament proposed stricter emission targets for the auto industry, putting down its marker in a growing fight inside the European Union over how much it can tighten CO2 limits for cars.
WSJ.com: What’s News Europe
Angela Merkel’s grip on power took a severe blow when her party’s lawmakers ousted a close ally of the German chancellor as their parliamentary leader and replaced him with a candidate she didn’t endorse.
WSJ.com: What’s News Europe
The news that JetBlue and United Airlines have raised fees for checked bags and some flight cancellations has provoked the ire of two U.S. senators and a congressman who are calling for “relief from this fee gouging.”
Sens. Edward J. Markey (D-Mass.) and Richard Blumenthal (D-Conn.) and Rep. Steve…
Bitcoin is many things to many people. To some, it is a peer-to-peer version of electronic cash, just as Satoshi intended. To others, it’s a store of value, while yet others see it as a system for remittance. When it comes to Bitcoin’s ledger – the blockchain – interpretations are equally divided. This presents a problem in a court of law, as the state of California is about to discover.
California Believes It Can Define Blockchain
As we reported earlier this week, a draft law has been passed for defining various crypto-related technologies. Through defining terms such as “smart contract” and “blockchain”, it is hoped that the wheels of justice will roll smoothly when crypto-related cases pass through the courts, without being waylaid while sophistic lawyers argue over the minutiae. The initiative seems well-intentioned, for given the proliferation of ICO scammers and crypto criminals, it’s likely that words like “blockchain” will be uttered in court with increasing regularity in the years to come. Unfortunately, the state of California’s definition of blockchain sucks.
“Blockchain technology means distributed ledger technology that uses a distributed, decentralized, shared, and reciprocal ledger, that may be public or private, permissioned or permissionless, or driven by tokenized crypto economics or tokenless,” it begins, which seems logical enough. It’s in appending Clause (c) to Section 1633.2 of the California Civil Code that things come unstuck. It reads:
The data on the ledger is protected with cryptography, immutable, auditable, and provides an uncensored truth.
Truth or Word Salad?
Blockchains don’t understand truth. As an inert and intangible device, a blockchain cannot serve as an arbiter for what is true and what is false. The only logic it can grasp is that which is sent to it as ones and zeros for determining the state of a specific data input. Blockchains are incapable of storing the truth, the whole truth, and nothing but the truth.
Because public chains are permissionless, anything can be digitized and stored on them. In block 366186 of the bitcoin core blockchain, for instance, there is a transaction encoded with the message “9/11 inside job. Earth is flat.” According to the California Civil Code, that message constitutes uncensored truth. It may seem flippant to pick an extreme example of blockchain mendacity, but it is precisely instances like this that truculent lawyers will seize upon to muddy the waters and have a case delayed or abandoned.
A blockchain spectacularly fails to provide an uncensored truth. Nor is it immutable, as chain rollbacks are always possible. In almost every single respect, California’s definition fails miserably. And what if a legal case being heard doesn’t involve a conventional blockchain but a DAG – can the same definition still be applied? So many questions. So few concrete answers.
Stop Trying to Define Blockchain
California Democrat and Assembly member Ian Calderon, who pushed through the DLT bill, doubtless had good intentions. But in seeking to provide clarity, he may have unwittingly made matters worse. His biggest mistake was perhaps trying to define blockchain in the first place. After all, everything we know about blockchains comes from Satoshi Nakamoto’s Bitcoin and its accompanying whitepaper – where the word “blockchain” doesn’t appear once.
The words “block chain” are buried in Bitcoin’s code, but that’s as close as Satoshi ever got to the much maligned term. California might as well define blockchain as “an extremely slow and energy intensive database”, “overhyped internet buzzword”, “distributed ledger of bullshit” or “meme clung to by douchebags who completely miss the point of Bitcoin”. Whatever a blockchain is, it isn’t what the state of California thinks it is. And that’s the uncensored truth.
Do you think California’s definition of blockchain is airtight? Let us know in the comments section below.
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The U.S.-Mexico trade deal announced by the two countries’ leaders this week now faces scrutiny from their respective legislators, who ultimately must ratify the agreement.
WSJ.com: US Business
Civil rights groups and lawmakers express concerns about a TSA program that tracks domestic travelersJuly 31, 2018 | dailybusinessnews
Civil rights groups and lawmakers are demanding that the Transportation Security Administration explain a program that tasks federal air marshals at airports and on domestic flights to track and monitor Americans who have committed no crimes.
The program, called Quiet Skies, was first reported…
South Korea’s top financial regulator has urged lawmakers to pass the country’s first crypto bill quickly, citing the urgent need from rising incidents at crypto exchanges. There are currently several crypto-related laws pending at the National Assembly.
Crypto Law Urgently Needed
South Korea’s top financial regulator, the Financial Services Commission (FSC), has urged lawmakers to “pass the country’s first cryptocurrency bill quickly,” Bloomberg reported this week. According to the agency, “Korea urgently needs crypto laws as thefts rise,” the publication conveyed, adding that “local exchanges are rife with security flaws and money laundering risks.”
Hong Seong-ki, head of the FSC virtual currency response team, said in an interview:
We’re trying to legislate the most urgent and important things first, aiming for money laundering prevention and investor protection. The bill should be passed as soon as possible.
The South Korean government first announced crypto regulation in the second half of last year. In September, initial coin offerings (ICOs) were banned. A crypto task force was established at that time “to improve the transparency of transactions and improve the legal system to protect consumers,” Joongang Daily described.
Since then, the FSC and other regulators have announced additional crypto regulatory measures including the real-name system and trading restrictions on minors and foreigners. However, “the problem is that these announcements have shaken the market but do not provide a proper legal framework for investor protection or market development,” the news outlet pointed out.
According to the publication, there are currently five crypto-related laws pending at the National Assembly.
Inadequate Security Measures
Hong was further quoted by Bloomberg claiming:
While crypto markets have seen rapid growth, such trading platforms don’t seem to be well-enough prepared in terms of security.
In June, two Korean crypto exchanges suffered security breaches. Coinrail was hacked on June 10 with an estimated damage of 45 billion won (~US$ 40 million). Bithumb, one of the largest crypto exchanges in the country, was hacked on June 20 with an estimated damage of about 19 billion won (~$ 17 million).
Putting FSC in Charge of Crypto Exchanges
Following the security breaches at Coinrail and Bithumb, the Korean government immediately launched an investigation into their causes.
The FSC subsequently pushed for a bill to require crypto exchanges to report to and be regularly supervised by the Financial Intelligence Unit (FIU), which is under its supervision. “This is the first time government agencies have said they will oversee virtual currency exchanges,” Maeil Business wrote.
Emphasizing that he personally “wouldn’t recommend putting money in cryptocurrencies,” Hong reiterated:
FSC oversight wouldn’t imply an official endorsement of crypto trading. If the bill is passed, the regulator will focus on policing the exchanges rather than promoting their growth.
Meanwhile, the commission itself is undergoing a major restructuring. A bureau dedicated to financial innovation including cryptocurrencies will be established for policy initiatives, the FSC recently announced.
Do you think South Korea needs to pass a crypto bill urgently? Let us know in the comments section below.
Images courtesy of Shutterstock and the FSC.
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Always thought politicians were crooks? Now Amazon’s facial recognition system agrees with you, but not in a good way. A test by the ACLU matching all 535 Congress members to 25,000 mugshots found 28 false positives—many of whom are people of color, the Verge reports. “An identification—whether…