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Elon Musk’s Companies Revenue Under Risk As EU Warns Heavy Penalties

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The European Union (EU) has warned Elon Musk’s social media platform X sternly, indicating that it could face substantial fines. These penalties may extend to revenue generated from X and Musk’s other enterprises, such as SpaceX and Neuralink. This measure could amplify the financial risks for Musk’s businesses under the EU’s Digital Services Act (DSA).

European Union Targets Elon Musk’s Empire with Potential Revenue-Based Fines

Recent reports reveal that the European Union (EU) is contemplating imposing fines on Elon Musk’s X platform, potentially including revenues from his myriad other business ventures in the calculations. This approach comes under the Digital Services Act, which empowers the bloc to fine online platforms up to 6% of their annual global revenue for violations such as inadequate content moderation and transparency failures.

Hence, the potential fines could incorporate earnings from Musk’s companies like Space Exploration Technologies Corp. and Neuralink Corp., escalating the financial stakes. This approach suggests an aggressive regulatory posture in which Musk himself could be considered the liable entity rather than just the X platform. 

However, it is important to note that Tesla Inc. remains outside the purview of these potential fines, as it is a publicly-traded company not under Musk’s full control.

Navigating EU Regulations: X Platform Avoids DMA Scrutiny

These developments come even as Musk’s X platform managed to evade regulations under the EU’s Digital Markets Act last month due to its minimal market impact. However, the platform continues to face scrutiny for its content moderation practices. 

Moreover, the ongoing scrutiny stems from the platform’s struggles with controlling harmful content and misinformation. These challenges are magnified by the platform’s global reach and the high visibility and influence of its owner, Elon Musk.

Despite bypassing the requirements of the Digital Markets Act, X is still in the regulatory spotlight. The European Union’s Digital Services Act (DSA) is still a major regulatory concern, especially with the recent revenue-inclusion warning. The DSA ensures that digital platforms operate transparently and are held accountable for the content they host.

In addition, Elon Musk’s Tesla recently transferred its Bitcoin holdings, aggregating to a value of $760 million. The move involved reallocating its publicly known Bitcoin stash across multiple transactions, marking the company’s first such financial activity in over two years. These movements sparked speculation regarding the intentions behind them. 

In spite of the Tesla CEO’s continued troubles with the EU’s Digital Services Act (DSA), Musk has maintained strong support for Trump in the coming US elections. This has led Musk to offer a substantial $75 million donation to America PAC, boosting Donald Trump’s presidential campaign.

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Ronny Mugendi

Ronny Mugendi is a seasoned crypto journalist with four years of professional experience, having contributed significantly to various media outlets on cryptocurrency trends and technologies. With over 4000 published articles across various media outlets, he aims to inform, educate and introduce more people to the Blockchain and DeFi world. Outside of his journalism career, Ronny enjoys the thrill of bike riding, exploring new trails and landscapes.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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Regulation

What’s Next for Crypto Mining in Russia? Leaders Discuss Taxes and Legislation

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October 16, 2024

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Russia has been steadily moving towards full regulation of its crypto mining industry, as government officials and industry leaders met at the first forum of the Industrial Mining Association (IMA) in Moscow. 

The event, which happened on October 14, involved 70% of Russia’s crypto mining farms, showing that the country is increasingly interested in the sector. The discussions centred mainly on taxation, legal aspects of mining, and impact of crytocurrencies on cross border business transactions.

Taxation Framework for Crypto Miners

The primary discussion point of the forum was the proposal made by the Russian Federal Tax Service (FTS) to introduce a two-tier tax system for crypto-mining companies. The recommended plan to tax miners is proposed to be implemented at two key points. 

First, miners will be expected to make a deposit once they get cryptocurrency into their wallets. In the second stage, another tax payment or deduction would be calculated on the basis of the price at which the mined coins are sold or transferred from the wallet.

FTS official Alexey Katyayev noted that there is no final decision on the issue of the taxation system. Nonetheless, crypto mining will not be taxed with Value Added Tax (VAT) since cryptocurrencies are not meant for consumption within the country. Concurrently, individual miners will still be required to pay personal income tax on their profits.

Cross-Border Payments and Experimental Legal Regime

Another key area of discussion at the forum was the possibility of using mined cryptocurrencies for cross-border payments, especially under the Russia crypto mining’s Experimental Legal Regime (ELR). At the present moment, the Bank of Russia is developing the necessary infrastructure for the implementation of cross-border operations with the help of digital currencies. 

Nevertheless, there were different views on this matter. Some of the respondents complained that domestic production of crypto mining may not be adequate for export purposes. Some argued that instead of using cryptocurrencies, one should employ other financial digital assets designed for the international market.

Though details on the experimental regime remain scarce, it was agreed that information about the participants and trials’ results should not be made public. Anton Tkachev, Deputy Chairman of the State Duma Committee on Information Policy, noted that the anonymity of the experiment is crucial to avoid possible penalties and retain competitiveness in the Russian cryptocurrency mining sector.

Crypto Mining Registry and Compliance

In an attempt to increase the industry’s transparency, the Russian Federal Tax Service also suggested the creation of a national register of crypto miners. To this end, miners and other companies that engage in the cryptocurrency mining business will be required to provide information such as the location of their data centers, power consumption, and origin of the mining rigs used.

Additionally, they will be required to report their cryptocurrency output and electricity usage. While much of this data will remain confidential, the registry aims to ensure greater oversight and compliance with the law.

According to Katyayev, businesses that engage in crypto mining alongside other sectors such as manufacturing, cannot claim deductions in one area to offset against earnings in the other. However, he pointed out that regulation will enhance competition in the sector through the provision of clear legal framework.

Outlook for Russia’s Crypto Mining Industry

The consensus among forum participants was that crypto mining in Russia has a bright future, especially as the government continues to develop comprehensive regulations. 

According to Igor Runets, the CEO of BitRiver, the industry will generate new opportunities in the next 1-2 years as the required facilities for energy-consuming computing like artificial intelligence are set up.

The two features that are likely to make market players list their companies on the stock exchanges include transparency and legal certainty. Timofey Semenov, CEO of Intelion Data Systems, noted that this will open up new capital opportunities for large companies, which is crucial for the further development of Russian crypto mining.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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US Congressman Byron Donalds Proposes Crypto Regulatory Sandbox

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1 day ago

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October 16, 2024

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In a recent conversation with KMSmithDC, U.S. Congressman Byron Donalds stressed the importance of developing a regulatory sandbox for the crypto industry. Donalds described the industry as a “toddler” that is still young but has a possibility of growing. 

He pointed out that the cryptocurrency market has the potential to become a half a trillion dollar industry in the US if there are favorable regulations put in place.

Byron Donalds Advocates for Regulatory Flexibility

Byron Donalds emphasized that the use of a more flexible approach to the regulation of the rapidly developing crypto industry is crucial. He noted that the present model adopted by most regulatory bodies, including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), is too rigid. 

According to US Congressman Donalds, a more adaptive system, like a regulatory sandbox, would allow industry participants to set guidelines as they innovate.

”What the industry really needs is a regulatory sandbox”, Donalds said. “You guys make the rules because the industry is going to change so fast over the next five years.” He pointed out that the current regulatory authorities are “not very innovative enough” to match the advancement of technology hence the need for a shift in the system.

Donald Trump Campaign’s Support for Crypto

US Congressman Donalds, an avid supporter of Donald Trump’s 2024 presidential campaign, also discussed how the Trump campaign has adopted cryptocurrency. Moreover, the PAC supporting Trump has allegedly collected $7.5 million in cryptocurrency contributions during July-September 2024. 

These donations in BTC, ETH, XRP, and USD stablecoins reveal that Trump has changed his view about digital currencies. Additionally, the prediction market platform, Polymarket, has given a 59.5% chance of Donald Trump to win the U.S election while 40.3% chance of Kamala Harris.

Source: Polymarket

This is quite a change from Trump’s previous stance on cryptocurrencies during his tenure as president. The fundraising success, garnered from more than 15 US states and Puerto Rico, places Trump as the candidate favorable to cryptocurrencies as the November 2024 elections approach.

In the conversation, Byron Donalds accused the Democratic leadership of not taking the regulation of cryptocurrencies seriously. He also dismissed recent remarks by Democratic politicians, including VP Kamala Harris and Senator Sherrod Brown, on digital assets regulation.

Donalds said that, although some Democrats have lately discussed the need for frameworks, such statements are political. “Vice President Harris is saying it now because there are some issues in her polling,” he said. He also pointed out that the criticism coming from Sherrod Brown could have to do with him being in a tight race in Ohio.

Trump’s Plan to Overhaul Regulatory Agencies

According to the US Congressman Donalds, a potential Trump administration would aim at “cleaning house” in major regulatory bodies such as the US SEC and CFTC. In these talkings, there has been a rumour that Robinhood CLO, Dan Gallagher, may become the new US SEC Chair under the leadership of Donald Trump.

He believes that regulators should focus solely on their assigned missions rather than expanding their roles. “It’s about making sure that regulators simply do the job of carrying out the mission that the agency was given,” Byron Donalds stated.

He reiterated his belief that current regulatory bodies are falling behind in adapting to the fast-paced developments in the crypto industry. According to Donalds, if Trump wins the presidency, the administration will aim to ensure that these agencies better align with the needs of a rapidly evolving digital economy.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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Ripple CLO Breaks Down Next Steps In US SEC vs XRP Appeal

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2 days ago

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October 15, 2024

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Ripple Labs Chief Legal Officer (CLO) Stuart Alderoty has shared the developments of next steps that are to be taken in the ongoing lawsuit between Ripple and the United States Securities and Exchange Commission (SEC).

This case was filed in 2020 and focuses on the characterization of the XRP as a security, and whether Ripple conducted the sales of this token without registering them under the laws of the United States. As the legal fight enters the appeals stage, the firm and the US SEC prepare for a drawn-out process that could extend into 2026.

Ripple CLO Breaks Down Next Steps In US SEC vs XRP

Alderoty outlined the next stages of the appeal process at the agency’s annual Swell conference, explaining the basis of the agency’s appeal and Ripple’s cross-appeal. Stuart Alderoty said that the SEC has to file Form C, indicating what it wants to prosecute, by October 16, 2024. 

In two weeks, the firm will file its own Form C, which will present the company’s cross-appeal. The company has said that it plans to challenge the specific provisions of the original decision that held that certain institutional XRP sales constituted unregistered securities transactions.

After presenting Form Cs, the parties will then schedule when they will brief. The first brief by the US SEC is due in 90 days, and the commission is expected to present its legal points. Stuart Alderoty noted that the agency is expected to take the full 90 days, which means that the SEC’s first brief submission will be due mid-January 2025. The company will then file its response, followed by its own brief. This process, which includes several cycles of briefing and reply, is expected to continue until the middle of 2025.

Confidence in the Second Circuit

However, Stuart Alderoty was optimistic that the company is on stronger legal ground given the long time frame. In his speech at the Swell conference and other interviews, he said that Ripple is even more confident in its position in the U.S. Court of Appeals for the Second Circuit than it was in the Southern District of New York.

”We think this appeal will blow up in the SEC’s face,” Alderoty said, noting that the majority of the appeals in the Second Circuit do not lead to reversals of the district court’s decisions, but rather affirmations of such decisions. 

He pointed out that the SEC’s attempt to seek clarification through this appeal could positively impact the whole cryptocurrency space as the ruling will set a legal precedence.

Ripple’s Cross-Appeal Focuses on Institutional Sales

Ripple’s cross-appeal will only be on the part of the judgment of Judge Analisa Torres where she found that institutional sales of XRP by the company were a violation of the securities laws. While Judge Torres ruled that retail sales of XRP did not constitute unregistered securities offerings, she ruled against Ripple on institutional sales. 

The company will argue that these institutional sales did not involve “investment contracts” because they lacked specific rights and obligations, a key legal factor in determining whether a financial product is a security under U.S. law.

Alderoty explained that the firm is aiming for a legal precedent that clarifies this distinction. “We think that’s a fundamental rule of law that needs to be recognized,” he said, noting that trial courts have been reluctant to go that far in their interpretations. Nevertheless, the Ripple CLO acknowledged that the Second Circuit’s ruling could bring much-needed clarity, regardless of which side prevails.

In addition to its ongoing legal battle with the SEC, the company continues expanding its operations globally. At the Swell event, the firm also discussed the launch of its new stablecoin, RLUSD, a dollar-denominated token designed to enable faster and cheaper cross-border payments. The stablecoin is set to be issued under New York’s strict regulatory framework, which could give it an advantage in regulatory compliance, especially in an environment where other stablecoins face increased scrutiny.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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