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a16z: A glance at the latest global Crypto regulatory events

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This report series highlights the latest crypto regulatory and policy events related to web3 and crypto builders.

Source: a16z crypto Regulatory Team

Translation: DAOSquare

Editor's note: The a16z Crypto Regulatory Update is a series of reports that focus on the latest regulatory and policy events related to web3 and crypto builders, tracked and planned by the a16z crypto regulatory team. These overviews are based on the latest news, updates, new guidelines, ongoing legislation, and frameworks released by regulatory agencies/entities, industry alliances and professional associations, banks, governments, and other entities as they impact the crypto industry (or applications) around the world. Occasionally, we also include selected additional resources in the updates, such as speeches, posts, or other comments from us or others.

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- The US Department of the Treasury and the Internal Revenue Service (IRS) announced that businesses do not need to report income from digital assets like they report cash income, until relevant regulations are released by the Department of the Treasury and the IRS.

-The US Securities and Exchange Commission (SEC) has expanded the definition of "dealer" to include market participants who regularly provide significant liquidity in trading and market activities, including digital asset securities. The new definition may cover certain crypto companies, which will need to register with the SEC and become members of self-regulatory organizations, and comply with federal securities laws.

- The US Energy Information Administration (EIA) has been granted emergency permission to conduct temporary investigations into the power consumption of certain cryptocurrency mining companies operating in the United States. The EIA plans to collect data on a monthly basis from February to July 2024.

Commodity Futures Trading Commission (CFTC) in the United States

- The Commodity Futures Trading Commission (CFTC) of the United States has accused the digital asset platform Debiex of using the popular romance scam strategy to fraudulently misappropriate $2.3 million of customer funds for digital asset commodity trading.

-The Office of Customer Education and Outreach of the Commodity Futures Trading Commission (CFTC) in the United States has released a customer advisory report, warning the public to be aware of artificial intelligence scams, some of which are related to cryptocurrency arbitrage algorithms.

-The Office of Customer Education and Outreach of the Commodity Futures Trading Commission (CFTC) in the United States has released a customer advisory report, warning users of dating applications, messaging services, and social media to be aware of scams that require financial support or provide investment advice, sometimes related to cryptocurrency investments.

-CFTC Chairman Rostin Behnam stated that "the lack of legislation has not hindered enthusiasm for digital assets", and that the necessity of federal legislation for digital assets in the cash market "has never been more important than now."

United States Congress

- Tennessee Republican Senator Bill Haggerty and Wyoming Republican Senator Cynthia Lummis have proposed the 2024 Act to Prevent Illicit Finance Through Partnerships, which would establish a program under which certain government agencies and designated private entities would share information about potential illicit financial misconduct and threats, as well as related new risks.

- Wyoming Republican Senator Cynthia Lummis, North Carolina Democratic House Representative Wiley Nickel, and Nebraska Republican House Representative Mike Flood have introduced a Congressional Review Act resolution to overturn the Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) 121, which requires companies that provide custody of crypto assets to consumers to include the assets on their balance sheets.

- Patrick McHenry, Chairman of the Financial Services Committee of the North Carolina House of Representatives (Republican), and others wrote to Rohit Chopra, Director of the Consumer Financial Protection Bureau (CFPB), urging him to reopen and extend the recent public comment period on the CFPB's proposal to "define large participants in the market for general-purpose digital consumer payment applications".

- North Carolina House Financial Services Committee Chairman Patrick McHenry (Republican) and others wrote to Treasury Secretary Janet Yellen, asking her to clarify the Financial Stability Oversight Council's (FSOC) call to fill regulatory gaps in the existing spot market for non-securities digital assets as FSOC Chairman.

-Ohio Republican Senator JD Vance, North Carolina Republican Senator Thom Tillis, Tennessee Republican Senator Bill Hagerty, Wyoming Republican Senator Cynthia Lummis, and Alabama Republican Senator Katie Boyd Britt wrote to Gary Gensler, Chairman of the US Securities and Exchange Commission (SEC), expressing concerns about the SEC's enforcement action against Digital Licensing Inc. (also known as "DEBT Box").

- Wyoming Republican Senator Cynthia Lummis told CoinDesk TV that she is optimistic about stablecoin legislation "this year, and possibly even in the first half of the year."

US Department of Justice

The US Department of Justice (DOJ) has released an indictment accusing a Belarusian and Cypriot national of involvement with the now-defunct cryptocurrency exchange BTC-e, which provided a convenient platform for global cybercriminals to conduct their transactions.

- The US Department of Justice has charged three individuals in connection with a SIM-swapping scam, which involved fraudulent activities amounting to over $400 million. According to media reports, FTX may have become a victim of this attack just hours after announcing bankruptcy. Recently, the US Department of Justice has charged two cryptocurrency fraud suspects and obtained a guilty plea from another suspect, all of whom are associated with a global cryptocurrency Ponzi scheme called HyperFund, involving a staggering $1.89 billion. The US Securities and Exchange Commission (SEC) has charged two of these individuals in related civil lawsuits.

- A federal jury has found that a former financial engineer at Hydrogen Technology manipulated securities prices and orchestrated a scheme to defraud investors in the cryptocurrency HYDRO during its purchase.

- A commodity trading consultant has been sentenced to two years in prison and home confinement after admitting to using cherry-picking tactics to steal client profits in a pair of commodity pools he set up for trading cryptocurrencies and forex futures.

- An Indian national admitted to selling controlled materials on the dark web market and agreed to forfeit $150 million worth of cryptocurrency.

- A man from Texas has been indicted by a federal grand jury for submitting false tax returns that underreported or failed to report the sale of $4 million worth of Bitcoin, resulting in significant profits for him.

US Department of the Treasury

- The US Department of the Treasury and the Internal Revenue Service (IRS) announced that businesses are not required to report income from digital assets like they report cash income until relevant regulations are issued and become effective.

- The US Department of Treasury has released the "2024 National Money Laundering, Terrorist Financing, and Weapons of Mass Destruction Risk Assessment", which emphasizes the risks of illegal fundraising and virtual assets.

-Since the terrorist attack against Israel on October 7th, the US Treasury Department's Office of Foreign Assets Control (OFAC) has imposed the fifth round of sanctions on Hamas. The sanctions target the financial transaction network associated with Gaza and Hamas, which plays a key role in fund transfers, including cryptocurrency transfers.

- US Treasury Secretary Janet Yellen testified to Congress that digital assets, as well as the risks associated with cryptocurrency platforms and stablecoin runs, are one of the five areas of focus for the FSOC. She also encouraged Congress to pass legislation to regulate stablecoins and non-security cryptocurrency spot markets.

A report by the United Nations discusses the use of cryptocurrencies in gambling, money laundering, underground banking, and transnational organized crime in East Asia and Southeast Asia.