On 20 April 2021, The United States House of Representatives passed a bi-partisan bill called the “Eliminate Barriers to Innovation Act” (H.R. 1602).
The proposed legislation focusses on providing greater regulatory transparency for crypto assets in the US by clarifying the roles of financial agencies such as the Securities and Exchange Commission (the “SEC”) and the Commodity Futures Trading Commission (the “CFTC”).
The Bill proposes that Congress would establish a working group among participants from the SEC, CTFC and the private sector (which will include participants from fintech and financial services). The panel will then have a year to produce a report on the legal and regulatory frameworks related to digital assets.
The report produced by the panel is to make recommendations for the creation and improvements of primary and secondary markets for digital assets, standards related to digital asset intermediaries and best practices to reduce fraud in the industry as well as making recommendations on how to increase investor protection and assist with general anti-money laundering compliance.
The Bill follows the Biden administration’s proposals that cryptocurrency transfers of more than $10,000 will have to be reported to the US tax authorities in order to reduce what the US treasury has called the “tax gap” caused by a lack of sufficient regulation. It has been reported that US tax authorities have lost up to $600bn in tax revenue due to this lack of transparency. In the same vein, the California courts are cracking down on tax “leakage” on crypto transactions. On 5 May 2021 Payward Ventures Inc. dba Kraken was ordered to release information to the Internal Revenue Service about US taxpayers who have conducted at least $20,000 in transactions between 2016-2020 to enable the IRS to track down investors who owe taxes on their crypto investments.
Commentary
The increasing scrutiny of crypto activities in first world economies signals that those governments are recognising that crypto is becoming established. Whilst at the moment regulation remains ‘light touch’ as governments get up to speed, the various reports being commissioned indicate that more legislative oversight is to follow in the short and medium term.
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The regulatory regime which applies to crypto assets is increasing in complexity. Rosenblatt advises on all aspects of crypto assets and regulatory law.
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Should you have any questions about the legal framework for crypto assets in the UK, or wish to discuss your crypto business with us, please contact the authors named below.
Authors
Laura Clatworthy, Partner
