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The Department of Justice has filed its first criminal complaint against a US citizen accused of evading sanctions by using cryptocurrency.

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The DOJ has filed its first criminal complaint against an American who allegedly used cryptocurrency to evade US sanctions. “The payments platform advertised its services as a way to get around US sanctions, including purportedly untraceable virtual currency transactions.”

According to a judicial opinion document filed on Friday by US Magistrate Judge Zia M. Faruqui, the US Justice Department has filed its first criminal complaint against a US citizen who allegedly tried to evade American sanctions by using cryptocurrency. The case remains closed.

Judge Faruqui explained why he approved the Department of Justice’s criminal complaint against an American citizen accused of sending more than $10 million in bitcoin to a crypto exchange in a country that has been comprehensively sanctioned. Cuba, Iran, North Korea, Syria, and the Crimean, Donetsk, and Luhansk regions are currently under international sanctions.

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has imposed fines against crypto exchange platforms for violating sanctions laws. However, the judge explained:

The Department of Justice can and will criminally prosecute individuals and entities for failure to comply with the OFAC’s regulations, including as to virtual currency.

The DOJ alleged that the defendant, a U.S. citizen, used an IP address in the U.S. “to conspire to operate an online payments and remittances platform” based in a comprehensively sanctioned country. The Justice Department noted:

The payments platform advertised its services as designed to evade U.S. sanctions, including through purportedly untraceable virtual currency transactions.

The defendant also opened an account with a U.S.-based cryptocurrency exchange to buy and sell bitcoin. The defendant then used this crypto exchange account to transmit over 10 million dollars worth of BTC between the U.S. and sanctioned countries for the platform’s customers. The DOJ detailed how the defendant conspired to violate the International Emergency Economic Powers Act (IEEPA) and defraud the United States.

The judge further noted: “The question is no longer whether the virtual currency is here to stay … but instead whether fiat currency regulations will keep pace with frictionless and transparent payments on the blockchain.”

After the Terra Meltdown, the UK confirms its commitment to regulate stablecoins.

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Following the collapse of Terra USD (UST) and terra, the British Treasury Department has reaffirmed its commitment to regulate stablecoins (LUNA). “This will allow issuers and service providers to operate and grow in the United Kingdom while maintaining financial stability and high regulatory standards,” an HM Treasury spokesperson said.

HM Treasury, the U.K. Treasury Department, is moving forward with plans to regulate payment stablecoins despite a crypto market meltdown last week, The Telegraph reported Saturday.

The affirmation followed the collapse of Terra which saw algorithmic stable coin terra USD (UST) lose its peg to the U.S. dollar and terra (LUNA) fall to near zero.

An HM Treasury spokesman said: Legislation to regulate stablecoins, which were used as a means of payment, will be part of the Financial Services and Markets Bill which was announced in the Queen’s Speech.

“This will create the conditions for issuers and service providers to operate and grow in the UK, whilst ensuring financial stability and high regulatory standards so that these new technologies can be used reliably and safely,” the spokesperson added.

Prince Charles delivered the Queen’s Speech last week, outlining the British government’s legislative agenda for the next parliamentary year. Two of the bills put forward specifically mention crypto assets.

The U.K. government unveiled a detailed plan in April to make the country a global crypto hub and “a hospitable place for crypto.” The plan includes establishing a dynamic regulatory framework for crypto, regulating stablecoins, and working with the Royal Mint to create a non-fungible token (NFT) to be issued by summer.

Rishi Sunak, the British chancellor of the exchequer, has said the plan will “ensure the UK financial services industry is always at the forefront of technology and innovation.”

However, the Treasury does not plan to include algorithmic stablecoins in the legislation, saying they do not guarantee stability. Terra USD (UST) is an example of an algorithmic stable coin.

The HM Treasury spokesperson further detailed: The government has been clear that certain stablecoins are not suitable for payment purposes as they share characteristics with unbacked crypto assets.

“We will continue to monitor the wider crypto asset market and stand ready to take further regulatory action if required,” the spokesperson included.

U.S. lawmakers also called for the urgent regulation of stablecoins last week following the fall of Terra. However, Treasury Secretary Janet Yellen believes that stablecoins are currently not a real threat to U.S. financial stability.

Cryptocurrencies Could Lead to “Dollarization” of the Indian Economy, According to a Report

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According to a Press Trust of India report, top officials of India’s central bank told a parliamentary committee on finance that cryptocurrency could lead to the “dollarization” of a part of the economy, which could be detrimental to the country’s sovereign interests.

  • “Almost all cryptocurrencies are dollar-denominated and issued by foreign private entities,” officials told members of the finance committee, including Jayant Sinha, chairman of the Parliamentary Standing Committee on Finance. “This may eventually lead to dollarization of a part of our economy, which will be against the country’s sovereign interest.”
  • Amid the “crypto crash” last week, central bank officials said cryptocurrencies have the potential to become a medium of exchange and replace the rupee in financial transactions both domestic and across borders, according to the report.
  • “It will seriously undermine the RBI’s capacity to determine monetary policy and regulate the country’s monetary system. It could replace a part of the monetary system undermining RBI’s capacity to regulate money flow in the system,” RBI officials said.
  • Top officials at the Reserve Bank of India (RBI) reiterated their “institutional view that cryptocurrencies should be banned,” a source familiar with the matter told CoinDesk.
  • “The RBI has said this to the parliamentary committee last year too. The RBI is talking about the dangers of dollarisation and banning crypto with regard to its use case as a currency or legal tender not necessarily as an asset class,” said a source in the parliamentary committee on finance.
  • Earlier this month, CoinDesk reported about how the parliamentary committee on finance had “chided” representatives of India’s crypto industry for overstating the importance of crypto advocacy without addressing challenges such as terrorism and money laundering through crypto.

Regulators from around the world are considering forming a joint body to coordinate crypto rules.

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According to a top executive of the International Organization of Securities Commissions, a joint body will be established within the next year to better coordinate cryptocurrency regulations (IOSCO).

Top executives at the International Organization of Securities Commissions (IOSCO) discussed cryptocurrency regulation this week. Members of the global organization regulate more than 95% of the world’s securities markets in more than 130 jurisdictions.

Emphasizing the need for a global group to align crypto rules, IOSCO Chair Ashley Alder said global market regulators are likely to launch a joint body within the next year to better coordinate cryptocurrency regulations, Reuters reported.

Noting that similar setups are already in place for climate finance, including one set up by the G20 countries, Alder described:

There isn’t anything like that for crypto at the moment … But I do think now it’s seen as one of the three C’s (Covid, climate and crypto) so it’s very, very important.

Citing the boom of digital currencies, including bitcoin, the IOSCO chair said crypto “has gone up the agenda” and become one of the three key areas authorities are focused on.

She noted that there are multiple crypto-related risks that need to be addressed, adding that regulators are lagging behind on some key risk areas, including cyber security, operational resilience, and a lack of transparency in the crypto ecosystem.

Martin Moloney, secretary-general at the IOSC, said at the International Swaps and Derivatives Association’s annual general meeting this week:

We are on the cusp of something new, something important and something that requires a lot of work from us.

He opined: “I don’t have to have a crystal ball to be able to say, ‘Will crypto still be around in 20 years’ time?’ It doesn’t matter. I do know, as you can see, that it has developed sufficiently that we have to begin to act as if it will still be around in 20 years’ time. We have to take it that seriously.”

The secretary-general urged the crypto industry to engage with regulators, stating:

Use your ingenuity, use your technology to solve the regulatory problem instead of telling us to go away, that you don’t want to engage with the regulatory problem.

The Nigerian Securities and Exchange Commission (SEC) has announced new rules for issuing digital assets.

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New rules governing the issuance of digital assets have been announced by Nigeria’s securities regulator. Platforms that offer digital assets must also register under the new regulations.

The Nigerian Securities and Exchange Commission (SEC) has issued new regulations governing the issuance of digital assets as securities. The rules also specify the registration requirements for platforms that provide digital assets (DAOPs). The new set of rules, which were recently published by the commission, apply to virtual asset service providers (VASPs) and digital asset exchanges.

Individuals or entities interested in raising funds through a coin offering or a private sale of tokens must first submit a “assessment form and the draft white paper,” according to the new regulations. According to the commission’s draft white paper, an entity seeking permission to operate must provide “complete and current information regarding the initial digital asset offering projects, business plan, and other relevant information.”

The draft document must also give a brief description of the initial digital asset offering, the value of each token, and the privileges it gives to the buyer. The use and allocation of the funds must also be stated therein, the SEC said.

Concerning white papers of initial digital asset offering projects, the commission said the document should have a disclaimer stating this does not represent an offer to sell. Once the required documentation has been filed, the SEC will review it to make a determination.

[The Commission shall] review same within 30 days from receipt to determine whether the digital asset proposed to be offered, constitutes a ‘security’ under the Investment and Securities Act 2007.

After a determination is made, the SEC will communicate this to the issuer within five days of the conclusion of the review.

Besides explaining the steps prospective issuers of digital currencies must take, the commission also lists the requirements and limits that must be adhered to. For an applicant seeking to register as a DAOP, the new rules say they must pay a filing fee equivalent to $241, a processing fee of $724, and a registration fee of $72,430.

Elsewhere in its 54-page new rules document, the commission says a DAOP “shall maintain a register of initial token holders who subscribed for the virtual assets/digital tokens during the offer period and enter into the register.” On using another platform as a host, the SEC said an “Issuer shall not be hosted concurrently on multiple DAOP or on an equity crowdfunding platform.”

Bitriver, a Russian crypto mining company, is considering challenging US sanctions.

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Bitriver, one of the largest operators of crypto mining data centers in Russia, may file a lawsuit against the US over the decision to sanction it. The firm insists that it does not assist the Russian government in evading international sanctions.

The US Treasury Department recently designated the Swiss-registered company and a number of affiliated entities in a new round of sanctions against Russian businesses and individuals, and Bitriver is considering filing a lawsuit against them. With the new sanctions imposed over the war in Ukraine, Russia’s coin minting potential was specifically targeted.

In comments to the RIA Novosti news agency, Bitriver stated that the department’s actions are damaging its reputation and international business since the accusations are unfounded. The company is also convinced there are no legal grounds for the restrictions and intends to demand American authorities remove it from the blocklist. It also emphasized:

Bitriver is not a government agency, but a 100% private company that in no way helps the Russian Federation to circumvent sanctions.

The Russian group also accuses the Treasury of unfair competition practices and lobbying for the U.S. mining industry, thus violating the rules of the World Trade Organization. Bitriver CEO Igor Runets describes the department’s move as “an attempt to change the global balance of power in favor of U.S. companies and remove the largest Russian player from the market.”

Bitriver claims that despite the restrictions, all its production facilities and offices in the Russian Federation are operating normally. The company also continues to provide services to its international clients who, it says, have confirmed their intentions to further cooperate with the Russian bitcoin mining operator.

Western allies have introduced several sanctions packages against Russia that have limited its access to global finances and foreign reserves. Concerns have been raised that the Russian government and citizens may use cryptocurrencies to evade the restrictions. Officials in Moscow have highlighted Russia’s competitive advantages for mining in terms of cheap energy resources and a cool climate. A draft law tailored to regulate the sector was submitted to the parliament in April.

The Shanghai High Court has declared Bitcoin to be a virtual asset with economic value that is protected by Chinese law.

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Bitcoin has been declared a virtual asset protected by Chinese law by the Shanghai High People’s Court. The cryptocurrency has economic value, according to the court.

The Shanghai High People’s Court has declared that bitcoin qualifies as a virtual asset protected by Chinese law despite the ban on cryptocurrency trading in China, Sina reported Friday.

The court’s official Wechat channel posted a notice last week stating:

In the actual trial practice, the People’s Court has formed a unified opinion on the legal position of bitcoin, and identified it as a virtual property.

The court further explained that bitcoin “has a certain economic value and conforms to the property’s attributes, the legal rules of property rights are applied for protection.”

The statement marks the first time that a higher court in China has issued a ruling concerning a bitcoin case.

The court’s statement refers to a case involving Mr. Cheng Mou who filed a lawsuit with the Shanghai Baoshan District People’s Court on Oct. 10, 2020, demanding that Mr. Shi Moumou return his one bitcoin.

After the trial, the court ruled on Feb. 23, 2021, that Shi must repay Cheng his BTC within 10 days of the judgment. However, Shi refused to make the payment, prompting Cheng to seek further redress from the local court system. The Baoshan court subsequently arranged for intermediation between the two parties.

Liu Yang, a lawyer from Beijing’s Deheng Law Firm, told local media that the high court’s statement will have strong significance as a reference ruling for civil disputes involving bitcoin in the Shanghai area.

Bitso, a Mexican cryptocurrency exchange, has launched a stable yield program.

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The cryptocurrency exchange based in Mexico, Bisto, is expanding its crypto investment options. Customers will now be able to earn money simply by holding bitcoin or stablecoins in the company’s wallet. The Bitso+ program, which is designed to help customers combat inflation in Latam, will offer different yields based on the amounts deposited by users.

Bitso, one of the biggest cryptocurrency unicorns in Latam, is expanding its services offerings by introducing new yield services for customers. A new program, called Bitso+, will offer users different yield plans according to the cryptocurrency and the quantities present in the wallet of the exchange.

This program, which was available to many users before and is now open for all users, offers up to 6% yield for bitcoin deposits, and up to 15% yield in stablecoins. However, this depends on the amount that the user has in the exchange wallet. For example, for bitcoin, the 6% yield applies for the first 0.4 BTC, and then 3.5% applies for the BTC outside of that range. In the same way, if the stablecoins invested go above $1,000, the yield goes down to 10%, and from $20,000 and up, a 7% yield applies.

David Álvarez, from Bitso+, remarked on the importance of USD-pegged stablecoins in this system for the early adopters. Álvarez stated:

It will be a dollar and it is an easier way to understand the benefits of cryptocurrencies.

Users and holders of crypto are now seeking more and more options to put their funds to work by earning yield while still having these funds available for withdrawals. This is especially more interesting for countries that have faced high levels of inflation in Latam, such as Argentina and Venezuela. This is the target audience Bitso is aiming for with this new feature. On this, Bitso CEO and co-founder Daniel Voguel stated:

Inflation continues to rise worldwide and especially in Latam, with this new feature we are providing a new way to increase your wealth just by having your assets in your Bitso wallet.

The exchange informed that other cryptocurrencies might be added to the Bitso+ program in the future.

Putin obliges election candidates to disclose their cryptocurrency holdings outside of Russia.

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(Image via Getty Images)

Candidates for government offices in Russia are now expected to provide authorities with details about the crypto funds they have acquired in other jurisdictions. A decree recently signed by Vladimir Putin adds the requirement to an earlier presidential decree on the verification of filed statements on property and property-related liabilities of Russian officials abroad.

The amendments, which entered into force immediately after the signing of the new decree on May 9, concern not only those who run in elections on the federal and regional level but also their close relatives. From now on, their families will have to account for all of their crypto investments as well.

The new provisions refer to any spending for the purchase of digital financial assets, a term encompassing cryptocurrencies under current Russian law, and digital currency. The latter definition will be introduced with a new law drafted by the Ministry of Finance.

The respective Russian authorities will verify the submitted information. To do that, they will demand documents indicating the value of the purchased crypto assets. Affected Russian citizens and their relatives will have to also share the details of each transaction, including the date and other identifiers.

Officials in Moscow have been working to comprehensively regulate the country’s crypto space as many aspects remained outside the scope of the law “On Digital Financial Assets” which went into force in January, 2021. These include the legal status of cryptocurrencies like bitcoin and related activities such as trading and mining.

In late March, the Russian parliament adopted a bill obliging persons running for office to present information about their digital asset holdings inside Russia. The legislation amends various acts and concerns presidential and parliamentary candidates as well as other government officials. Putin singed it into law in April.

The latest presidential decree targets candidates in elections for state and municipal authorities. It also covers representatives of political parties who have been nominated for the highest posts in any of the constituent entities of the Russian Federation, according to an announcement published by Russia’s portal for legal information.

India is considering imposing a 28 percent GST on all cryptocurrency transactions, according to a report.

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The Indian government is reportedly considering levying a 28 percent GST on all cryptocurrency transactions. “At the moment, only a portion of the services provided by crypto exchanges is taxed. One tax expert warned that taxing the entire transaction at a higher rate of 28 percent could send the markets into free fall.

India’s Goods and Services Tax (GST) Council will soon make a decision on whether to expand the scope of applicable transactions and levy a 28% GST on all services and activities related to cryptocurrencies, CNBC TV18 reported Monday.

The GST Council is the apex decision-making body chaired by the country’s finance minister. The council has nominated its law committee to form a view on the GST issue relating to cryptocurrency. Sources told the publication:

There are various aspects of cryptocurrencies — the transactions involving cryptos, cryptos being used to make purchases, cryptos being received as payments. All these aspects are under examination and will be discussed by the law committee.

“Tax proposals will be analyzed by the law committee, which will recommend its views to the GST Council for its consideration,” one person familiar with the matter was quoted as saying.

The sources explained that crypto exchanges in India are currently classified as “an intermediary service” and are taxed at 18% GST. “They will have to be classified separately,” the sources noted, adding:

Every transaction will be subject to 28% GST, if agreed upon by the GST Council.

The GST rate for online gaming (without betting) is currently 18%. However, online games involving betting or gambling are taxed at 28% GST.

A number of parliament members have demanded that cryptocurrency transactions be treated as gambling. One person familiar with the issue explained: “Several MPs demanded to raise GST on cryptocurrencies to 28% like gambling and lotteries. As Parliament is an apex body, their demands will also be examined by the law committee.”

Commenting on the Indian government expanding the type of transactions that are subject to GST, Saket Patawari, an executive director at tax consultancy firm Nexdigm, opined:

Currently tax is levied only on the part of the services provided by crypto exchanges. Subjecting the whole transaction to tax at a higher slab of 28% could give the markets a free fall.

Cryptocurrency income is currently taxed at 30% in India. Moreover, a 1% tax deducted at source (TDS) will start being levied on crypto transactions on July 1.

Meanwhile, the Indian government is working on the country’s crypto policy. Finance ministry officials have been consulting with the International Monetary Fund (IMF) and the World Bank on cryptocurrency regulation.

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