The Biden administration announced tax reporting on cryptocurrency transfers to Chinese regulators cracking down on cryptocurrency mining. It has come out strongly on the 1.5 trillion dollar market. It holds a different view from the crypto encouraging Trump administration. The Biden administration proposes to report transactions above 10,000 dollars in cryptocurrency to the Internal Revenue Service (IRS).
Interestingly, India’s tax treatment of cryptocurrencies depends on whether these are held as investments or stocks in trade. More on this, soon.
In the past few weeks, the global crackdown has impacted cryptocurrency trading with Bitcoin and Ethereum at 8 and 12 percent. Within the 24 hours of the crackdown 8.6 billion dollars were liquidated in the cryptocurrency market leading to red figures in the cryptocurrency market charts.
While ElSalvador gave legal recognition to cryptocurrencies in its economy, UK, Japan, China and Mexico are not interested in considering it as a legal tender at this point. Mexico has conveyed that crypto assets are not legal tender and not considered as a currency either.
Authorities in UK and Japan issued a warning to the world’s biggest cryptocurrency exchange Binance Holdings Ltd. this week. Account holders of the cryptocurrency exchange have also been issued warnings by the UK’s Financial Conduct Authority (FCA). The FCA stated in the notice that “Binance Markets Ltd. must not, without prior consent of the FCA carry out any regulated activities”. Disclaimer has to be issued on the company’s website and social media handles displaying the FCA notice. All UK consumer records have to be now secured and informed to FCA by July 2, 2021. Japan’s Financial Service Agency issued a statement saying that Binance isn’t registered to do business in Japan.
Binance in its statement mentioned that Binance Market was not using regulatory permissions and the notice would not have any impact on the services provided on its website. It emphasized that it takes compliances and obligations seriously and is actively updating its policies, rules and laws in the space.
FCA moving into the oversight of cryptocurrency trade in the UK comes at a time when cryptocurrency exchanges are coming under severe scrutiny from regulators not just in Europe but in India too.
The hashrate in China started dropping rapidly, as Chinese regulators started closing down the Bitcoin mining in Sichuan and Xinjiang, hoping to root out all Bitcoin and Ether mining in a year. It has resulted in inventory sales in the short term. People’s Bank of China issued notice to all cryptocurrency exchanges calling for regular checks and closure of client accounts involved in cryptocurrency transactions.
The Chinese government is pushing for its own digital yuan amidst growing concerns of money laundering and illegal cryptocurrency mining. China is home to 70 percent of cryptocurrency mining globally with Sichuan and Xinjiang being the most prominent regions in the country.
Following this, the world’s largest mining hardware seller, Bitmain closed its operations in China. The impact was felt on computer hardware too as the price of mining machines fell over 75 percent. Mining machines are now being sold at 700 yuan down from their regular trading price of 4000 yuan in April 2021.
The monthly CryptoByte is only for information purposes. Nothing contained herein is, purports to be, or is intended as legal advice and you should seek legal advice before you act on any information or view expressed herein. Endeavoured to accurately reflect the subject matter of this alert, without any representation or warranty, express or implied, in any manner whatsoever in connection with the contents of this. This isn’t an attempt to solicit business in any manner. Sources – MoneyControl and CNBC