Regulation
FIT21 Unlikely to Pass Senate Before November Election
Even though the Financial Innovation and Technology for the 21st Century Act (FIT21) has received bipartisan support and passed through the House of Representatives, the act is likely to face challenges in the Senate as analysts believe that before the November election, it may not be approved.
FIT21 Unlikely to Pass Senate Before Election
While there is increasing general agreement on the necessity for cryptocurrency regulation, legislators, lawyers, and lobbyists raised concerns at the 2024 Consensus event that due to the opaqueness of FIT21, more fine-tuning is required. Therefore, they forecast that this bill is likely not pass in the Senate before the November polls.
Gathering from legislators/lawyers/lobbyists at Consensus that FIT21 is unlikely to pass in the Senate before the Nov election.
However, they’ve also noted the emerging bipartisan momentum in Congress for crypto is real and here to stay independent of the next administration.…
— Juan Leon (@singularity7x) May 30, 2024
Nonetheless, the passage of the entire FIT21 bill in the House only 18 months after the political backlash resulting from the FTX scandal shows a stark change of heart in Congress with regards to digital assets.
CFTC Commissioner Summer Mersinger pointed out the liabilities of passing and enforcing similar extensive legislation by stating that oftentimes after bill enactment, rule-making can take months or even years. By identifying the time needed for a change of regulation to come into force, Mersinger was able to equate it to the extended time it took for the Dodd-Frank Act to be implemented.
Congressional Support and Regulatory Hurdles
The drive behind FIT21 is derived from formalizing the primary jurisdictional divide between the SEC and CFTC regarding digital assets. However, the Biden administration has presented its concern regarding the possibility of the emergence of some regulatory voids that may threaten market efficiency.
SEC Commissioner Hester Peirce as well spoke about the need for clarity of the legislation as well as criticized the previous actions of the SEC and expressed her welcoming to the enhanced legislative’s engagement in the sphere of cryptocurrencies.
Crypto is not bipartisan, it’s nonpartisan. We need to ensure it stays that way. pic.twitter.com/gGYxJeJbA9
— Tom Emmer (@GOPMajorityWhip) May 30, 2024
At the same time, the Republican representative Tom Emmer classified cryptocurrencies as non-partisan affairs and called for the establishment of proper regulatory guidance focused on rights instead of restrictions. His speech delivered at Consensus 2024 aligns well with the sentiments shared by other legislators in support of better regulation of cryptocurrencies.
Building a Pro-Crypto Legislative Force
As earlier reported by Coingape, U.S. Senator Cynthia Lummis had reaffirmed the strengthening support for cryptocurrency within Congress.
After a series of legislative wins attributed to the promotion of cryptos, Lummis declared the creation of a pro-crypto army in Congress to promote a favorable regulation of the industry.
This development has received some positive responses on social media, specifically among the cryptocurrency enthusiasts who are optimistic of further favorable regulatory frameworks in the future.
Read Also: Ripple CTO David Schwartz Shares “Proof” He’s Not Satoshi Nakamoto
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.
The newly elected Indian government under Prime Minister Narendra Modi will present the Union Budget later this month on July 23. India’s crypto industry is looking forward to this budget with high hopes expecting some tax reliefs along the way. Furthermore, the crypto industry is also looking for clear guidelines from the Indian government.
India Budget: Will Govt. Reduce Crypto Tax Burden?
For the upcoming union budget, the crypto industry has a few hopes such as the reduction in crypto taxes, allowing the off-setting of crypto losses against the gains in a given financial year, as well as treating capital gains in crypto at par with other asset classes. Lastly, the industry expects India to build a conducive environment for crypto firms, in order to compete with other global economies.
Back in 2022, the Indian government had imposed a hefty 30% tax flat on crypto gains. This was irrespective of one’s income tax slab. Additionally, the government imposes a 1% tax deducted at source (TDS) on every transfer of crypto assets.
Ashish Singhal, co-founder of cryptocurrency app CoinSwitch, stated that to make the most out of India’s Web3 opportunity, the Indian government must reconsider the cryptocurrency tax treatment in the upcoming budget. He said:
“The flat rate of 30 percent applicable on income from the transfer of VDAs needs to be re-examined to ensure parity with other tech-enabled sectors. Additionally, the threshold of Rs 10,000 or Rs 50,000 can also be looked at. Most crypto sellers (mainly individuals) are in the low-income bracket. Increasing the threshold will reduce the administrative burden on the tax department in processing refunds”.
A key advantage of investing in traditional assets like stocks, gold, and bonds is the ability to offset losses in one asset against gains in another within the same year and to carry forward unadjusted losses for future adjustments. In contrast, losses from one crypto asset cannot be offset against gains from another, nor can they be carried forward. As a result, the industry is seeking a major revision to this rule.
Also read: CoinDCX Acquires BitOasis To Foray Into MENA Region
Furthermore, during the pre-budget consultations, the Bharat Web3 Association requested the government in order to reduce the TDS from 1 percent to 0.01 percent.
“The Indian VDA market has seen a sharp decline in business over the past two years since the 1 percent TDS and capital gains tax were implemented. The 1 percent TDS has significantly impacted our business. We expect the upcoming budget to address our grievances and reduce the TDS and capital gains taxes on VDA transactions to reasonable levels, allowing us a level playing field to function and prosper,” said Shivam Thakral, chief executive officer, BuyUcoin, a cryptocurrency exchange.
Learning Lessons from US Regulations
The US SEC’s approach to regulation through enforcement has faced a strong backlash from the crypto industry players in recent years. Such regulatory measures have forced several token innovators and crypto developers to set up their base outside the US.
One of the primary criticisms of US crypto regulation is the lack of clear, consistent guidelines. This uncertainty has placed startups and established companies in a challenging position, unsure of compliance requirements and wary of abrupt legal repercussions.
As India advances in shaping its crypto regulatory framework, it can draw lessons from the US to sidestep potential pitfalls and cultivate a more favorable environment for digital assets. India should aim for a balanced approach, akin to the Goldilocks zone, promoting innovation while safeguarding investors through regulations that are neither overly stringent nor lax.
Emphasizing the practical utility of blockchain technology beyond speculation can spur the creation of impactful solutions in sectors such as finance, supply chain management, and public administration.
Also Read: Voice of Web3 by Coingape : Showcasing India’s Cryptocurrency Potential
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.
A wave of controversy has erupted in the crypto community as Celsius Network faces backlash for suing users who withdrew funds prior to the company’s bankruptcy. David Schwartz, the Chief Technology Officer of Ripple, has weighed in on the matter. Moreover, he offered insights into why Celsius might have taken such drastic action.
Ripple CTO On Celsius’ Latest Move
According to a user on X, Celsius Network has initiated lawsuits against numerous users in New York courts. The user expressed frustration, stating, “Celsius Network has officially sued me and thousands of innocent users… because we happened to take our money off the platform 90 days before they declared bankruptcy.”
The crux of the issue lies in the concept of “clawback.” Clawback provisions allow bankrupt companies to recover funds withdrawn by users within a certain period before the bankruptcy filing. In this case, the period is 90 days. Hence, Ripple CTO Schwartz emphasized the legitimacy of these actions in specific contexts, particularly regarding “non-existent ‘profits.’”
He stated, “If you withdrew fake ‘profits’ that were never actually earned or generated, then you didn’t withdraw your own money.” A user responded to the Ripple CTO, highlighting the perceived injustice. They wrote, “Clawback attempt for people who had withdrawn within 90 days of filing for BK. Absolutely disgraceful behavior.”
Schwartz tried clarifying the nuances by asking, “Are they just trying to clawback non-existent ‘profits’? Or are they trying to clawback returns of principal?” Further discourse revealed that Celsius is allegedly pursuing the return of both profits and principal amounts withdrawn within the 90-day period. The original poster detailed, “They started off asking for 27% of all principal as a settlement, which came across as a giant scam.”
Schwartz’s stance on such actions is clear: “Usually, in schemes like this, they don’t go after people who withdrew their own principal unless there’s evidence that they had inside information or connections.” Moreover, the lawsuit’s impact on users has been severe.
Also Read: XRP Price Decline To $0.40; Can The Ripple’s New Try It Feature Change That?
The Other Perspective
The original poster mentioned, “They are asking for outrageous sums of money, basically my entire net worth.” This sentiment is echoed by many in the crypto community, who fear the broader implications of such legal actions. Another user questioned, “Why would they let you keep profits off assets they are saying you didn’t have the right to have?”
Replying to the user, the Ripple CTO provided a different perspective this time. He argued that the losses suffered by users are a result of Celsius’ fraudulent activities. He stated, “Why should an innocent party bear the costs of Celsius’ fraud? Why should the victim have to suffer the additional loss of bearing the costs of a free option they never agreed to give anyone?”
The lawsuits have not only financial repercussions but also emotional ones. The original poster described the emotional turmoil caused by the lawsuits and the substantial legal fees incurred. “I have to spend thousands to retain an attorney,” they lamented.
As the crypto community watches closely, prominent figures like Coinbase CEO Brian Armstrong and TRON founder Justin Sun have been called upon to support the affected users. In addition, they also asked for aid from ZachXBT, a renowned crypto sleuth. The outcome of these lawsuits could set a significant precedent for the industry.
Also Read: Ripple CLO Slams US Authority Over Crypto Regulation Approach
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.
The U.S. House will vote next week to overturn President Joe Biden’s veto of Staff Accounting Bulletin 121, also known as SAB 121. The bulletin has stirred controversy in the crypto industry. It mandates that firms custodying crypto record customer holdings as liabilities.
House Majority Leader Steve Scalise indicated the vote might occur on Tuesday or Wednesday. Following the veto, the vote is a constitutional obligation. The measure previously passed the House with a 228-182 vote.
Bipartisan Push to Overturn SAB 121 Veto
SAB 121 requires firms holding crypto assets for customers to list these as liabilities. This rule has raised concerns among banks and the crypto industry. They argue it could hinder their ability to safeguard digital assets.
The resolution to overturn SAB 121 has seen bipartisan support. In May, the Senate passed it with a 60-38 vote, including support from Senate Majority Leader Chuck Schumer. However, overturning a veto requires a two-thirds majority in the House and Senate.
From venture capital firm Paradigm, Alexander Grieve noted the challenge but saw potential. “Remember when Biden vetoed the SAB121 rollback? It’s back on the House floor next week.” He pointed out the previous bipartisan support for the FIT21 crypto market structure bill.
Also Read: Craig Wright Faces $1.9M Legal Bill As London Court Issues Freezing Order
Challenges Mount in Overturning Crypto Rule Veto
Despite bipartisan support, overturning the veto remains challenging. The House needs 290 votes, 60 more than the initial 228 votes in favor. Cody Carbone from the Chamber of Digital Commerce expressed doubts about reaching this threshold.
Carbone emphasized the difficulty of changing 60 members’ minds in a week. He acknowledged the efforts for consumer protection and good governance. However, he believes the attempt to override the veto will ultimately fail.
The crypto industry remains hopeful but realistic about the upcoming vote. They recognize the steep hill to climb to overturn the veto. The focus now is on rallying additional support in the House.
The outcome of the vote has significant implications for the crypto industry. If the veto is overturned, it could ease concerns about banks’ ability to safeguard digital assets. Conversely, if it stands, firms may need help complying with SAB 121.
The crypto industry has been vocal about its concerns. They argue that the rule could stifle innovation and hinder the growth of digital assets. The upcoming vote is crucial for determining the regulatory landscape for crypto.
Supporters of overturning the veto emphasize the importance of flexibility for financial institutions. They argue that SAB 121 imposes undue burdens on firms holding crypto assets. The vote will be a crucial indicator of congressional support for the crypto industry.
Also Read: Venezuela’s Digital Asset Remittances Hit Yearly $460 Million
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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