Crypto Link – November 2022 | Akin Gump Strauss Hauer & Feld LLP

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This edition of CryptoLink comes on the heels of the 2022 US midterm elections, and congressional lawmakers are now setting ambitious priorities for the next Congress, putting digital assets at the top of the list. Following the collapse of FTX and other high-profile liquidity-related issues in crypto markets, US investigators have stepped up enforcement efforts and several congressional jurisdictional committees have scheduled or expressed interest. for hearings to deal with continued volatility and recent corporate bankruptcies. On the legislative front, the Stabenow-Boozman Digital Products Consumer Protection Act (DCCPA) is widely expected to serve as the primary basis for crypto legislation in the new Congress, which officially begins January 3. 2023. The DCCPA identifies the Futures Trading Commission (CFTC) product as the primary regulator of the cryptocurrency space. The bill is likely to be significantly amended in the new Congress and could include key provisions of the Lummis-Gillibrand Responsible Financial Innovation Act (RFIA). The Senate Agriculture Committee is expected to be the lead committee on legislative activity in the 118th Congress, increasing the likelihood that the CFTC will be chosen as the primary regulator of any legislation. Additionally, the House Financial Services Committee (HFSC) and Senate Banking Committee (SBC) may focus their legislative efforts on regulating stablecoins, following the announcement of bipartisan efforts by Sens. Cynthia Lummis (R-WY), Kirsten Gillibrand (D-NY), outgoing SBC Ranking member Pat Toomey (R-PA), current HFSC President Maxine Waters (D-CA) and Ranking member Patrick McHenry ( R-NC) to draft these bills before the end of the year.

Financial Stability Oversight Board Releases Report on Financial Stability Risks and Regulation of Digital Assets

On October 3, 2022, the Financial Stability Oversight Council (FSOC) released its Digital Assets Financial Stability Risks and Regulation Report (the Report), which was issued in response to Executive Order 14067 on Safeguard responsible development of digital assets. The report examines the financial stability risks and regulatory gaps posed by different types of digital assets and further provides recommendations to address these risks. For example, in the report, the FSOC recommends the adoption of legislation providing for the regulatory power of federal financial regulators in the cash market of crypto assets that are not securities.

Statement from the Chairman of the Securities and Exchange Commission on Crypto Markets

Further information can be found here and here and Binance’s blog can be found here.

OECD releases crypto-asset reporting framework

On October 10, 2022, the Organization for Economic Co-operation and Development (OECD) released the final version of the Crypto Asset Reporting Framework (CARF) and changes to the Common Reporting Standard. The CARF provides for the reporting of tax information on transactions in crypto assets in a standardized way, with the aim of automatically exchanging this information with taxpayers’ jurisdictions of residence on an annual basis. The CARF includes rules that address the scope of covered crypto assets, entities, persons, and transactions subject to reporting requirements, as well as due diligence procedures to identify users of crypto assets and controlling persons. .

The CARF can be found here.

Financial Stability Board proposes framework for international regulation of activities related to crypto assets

On October 11, 2022, the Financial Stability Board (FSB) published a proposed framework for the international regulation of crypto-asset activities. The framework includes proposals for (i) recommendations that promote consistency and comprehensiveness in regulatory, oversight and oversight approaches to crypto-asset activities and markets, and (ii) high-level recommendations for regulation, oversight and monitoring of global stablecoin agreements. . In its press release announcing the proposed framework, the FSB noted that high regulatory standards should apply to crypto assets that can be used as means of payment due to the potential risks posed to financial stability.

The FSB press release can be found here and the proposed framework can be found here.

European Commission Calls for Reduced Electricity Consumption by Crypto Asset Players and Possible Ban on Crypto Asset Mining

On October 18, 2022, in its Q&A on the EU action plan on the digitization of the energy system, the European Commission noted that the energy consumption of cryptocurrency mining had attracted considerable attention, increasing by 900% over the past five years and amounting to around 0.4% of global electricity consumption. The European Commission has urged EU Member States to implement targeted and ambitious measures to reduce the electricity consumption of crypto-asset players, and further noted that if there is a need for load shedding in systems electricity, Member States must “be ready to stop”. crypto-asset mining”. Looking further ahead, the European Commission has noted the importance of ending tax breaks and other fiscal measures benefiting crypto miners currently in place in some member states. The European Commission’s Q&As are available here.

CFTC Releases Annual Law Enforcement Results

On October 20, 2022, the Commodity Futures Trading Commission (CFTC) released the agency’s annual enforcement results for fiscal year 2022. Significantly, in fiscal year 2022, the CFTC:

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