According to an article published by The Irish Times, on December 17, 2018, the High Court Bench in Ireland made a groundbreaking ruling. Authorities stated that ether (ETH) held by criminals serving time for the sale of illicit drugs constitutes the proceeds of crime.

Ether Constitutes Proceeds of Crime

While the legal status of cryptocurrencies continues to be a matter of speculation the world over, Justice Carmel, Steward of the Irish High Court, has ruled that ether, the cryptocurrency of smart contracts platform Ethereum, can be deemed the proceeds of crime.

Indicted for drug trafficking, Neil Mannion was jailed in 2015 at Dublin Circuit Criminal Court after he and his partner in crime pled guilty to possession of LSD, amphetamine, and cannabis resin. The duo’s plan was to sell the drugs at Bank House Business Centre, South Circular Road on November 5, 2014.

Currently, Mannion is serving a six and a half years imprisonment sentence in Wheatfield Prison due to a search conducted by the Irish police at his property on Dublin’s South Circular Road in November 2014.

Per the article, Mannion accepted that the property was used for the purpose of distribution of illegal drugs in Dublin. He also admitted to buying and selling drugs on deep websites like the Silk Road and Agora under the alias “the Hulkster.”

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Soon after Mannion’s admission, the Criminal Assets Bureau (CAB) brought proceedings against the criminal stating the funds held by him in credit cards, bitcoin, and bank accounts were the proceeds of crime. The proceedings were eventually settled in February 2016.

However, while sifting through the computer devices seized during the search at Mannion’s property, the CAB came to know that he possessed 2,000 ether in an online wallet. Interestingly, as ether was not considered a trading currency back then, it did not constitute the first set of proceedings.

In July 2016, the CAB filed an application seeking to have the 2,000 ether held by Mannion to be deemed the proceeds of crime.

In response, Mannion claimed that investigation into his crypto holdings and cryptocurrency wallets was in direct contravention of his privacy rights. He also stated that because the criminal proceedings against him were already settled in December 2015, the state no longer had the right to retain his computer devices.

However, Mannion’s arguments were annulled by Judge Steward when she ruled that the agents had exercised due diligence with regard to their constitutional rights. She added that Mannion’s privacy rights were not compromised throughout the investigation, and the CAB had ensured that the assets were not retained unconstitutionally.

Law and Cryptocurrencies

The status of digital currencies in the eyes of the law has been rather blurry till date. Contrasting hearings and opinions regarding cryptocurrencies have further aided in the cobweb of crypto’s legal facet.

BTCManager reported on October 28, 2018, how the Shenzen Court of International Arbitration ruled bitcoin (BTC) legal due to its inherent nature as “property” and its “economic value.”

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New regulations for crypto-related companies, which Hong Kong’s Securities and Futures Commission (SFC) announced earlier , might prevent crypto entrepreneurs from entering the market. Expert comments on the situation were reported by business media Nikkei Asian Review on Monday, Dec. 17.

Timothy Loh, owner of a local law firm, told Nikkei that some entrepreneurs might decide not to participate in the new framework in order to “maintain their current shares in the market.” “The requirements of the SFC initiative may prove too burdensome for some operators,” he added.

Other speakers cited by Nikkei believe that higher trading costs could discourage institutional investors from entering the market, which could work against the plans to stabilize markets with their presence. However, the counterargument is that a stricter policy may lead to greater investor confidence, Nikkei notes.

The SFC first announced the new regulatory framework in November. The guidelines compared cryptocurrency exchanges to existing licensed providers of automated trading services, pointing out that they also need to protect investors.

Moreover, the SFC has major concerns about money-laundering cases and fraud, which have prompted the regulator to introduce new legislation. It will likely be applied to exchanges, traders, investment funds and other crypto-related businesses.

Under the new guidelines, investment funds are obliged to obtain a license from the SFC in the event that more than 10 percent of their assets consist of Bitcoin (BTC) or other cryptocurrencies. Moreover, in this case, they will be allowed to sell products only to professional investors.

Before applying for a license, crypto entrepreneurs can participate in a “regulatory sandbox” to test their solutions.

The new regulation also refers to initial coin offerings (ICO), Nikkei reports. For example, all tokens have to fulfill the SFC’s requirements and are obliged to have existed for at least 12 months before an ICO is launched.

Hong Kong is known for its significantly more lenient approach toward cryptocurrencies in comparison to mainland China, which upholds an effective ban on crypto activities. According to a recent report published by CryptoCompare, the highest quantity of top exchanges is still located in Hong Kong (10) and Singapore (11).

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The Italian securities regulator has suspended two projects for allegedly offering fraudulent crypto investment schemes. The 90-day suspensions were reported in an official statement on the regulator’s website published Monday, Dec. 17.

The Italian Companies and Exchange Commission — or Commissione Nazionale per le Società e la Borsa (CONSOB) — is the Italian analogue of the United States Securities and Exchange Commission (SEC) and represents a governmental authority that regulates the Italian securities market.

Both firms suspended by the CONSOB — Bitsurge Token and Green Energy Certificates — are allegedly scam projects from Avalon Life, a company that is not based in the European Union. Both have been banned from offering investments for 90 days, starting from Dec. 12, according to two official resolutions.

Allegedly fraudulent scheme Bitsurge was promoted on the website bitsurge.io and on the Facebook page dubbed “Bitsurge Token.” As described in the resolution, the company was offering investors “token contracts” with monthly returns from 6 to 13 percent for capital amounts ranging from $1,000 to $25,000. The CONSOB document notes that customers reportedly did not possess any autonomy in the management of their tokens.

The second scheme, dubbed Green Earth Certificates, was reportedly promoted through the Facebook page “Progetto Crypto Green Earth” and offered “Green Earth Certificates” in order to protect rainforests from deforestation by purchasing forest areas via blockchain. The alleged scam intended to provide a 6 percent reward on the sum of crypto investments in forest areas — such as Costa Rica — which have large areas of rainforests.

Recently, the CONSOB has issued a joint warning with Malta’s Financial Services Authority (MFSA) about an unlicensed cryptocurrency exchange named OriginalCrypto.

In mid-November, the CONSOB also sent cease-and-desists to three crypto-related firms for the alleged offering of unapproved investment services.

In regard to the issue of crypto-related advertising on Facebook, the social media giant had previously banned crypto and ICO ads in January 2018, claiming that it wanted to prohibit “misleading or deceptive promotional practices” associated with crypto.

However, the social media entity updated their policy to allow cryptocurrencies ads again in late June 2018, still maintaining their ban on promoting initial coin offerings (ICOs).

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Japan’s Financial Services Agency (FSA) responsible for regulation has published a report outlining its proposals for changes to the current rules which govern cryptocurrency exchanges.

The main purpose of the updated rules is primarily aimed at addressing hacking incidents, self-regulation, deemed dealers, privacy coins, and margin trading. The framework, which also targets ICOs, was established after 11 meetings of the FSA study group.

Last month, FSA’s Study Group on Virtual Currency Exchange Industry concluded its tenth meeting. The group classified tokens according to three categories: virtual currencies with no issuers (like Bitcoin), virtual currencies with issuers, and virtual currencies that not only have issuers but also distribute profits.

According to the FSA, no major barriers prevent the new regulation becoming law and the heightened focus on cryptocurrency by the agency is thought to be a result of highly publicized hackings earlier in the year. The new laws are aimed at preventing such incidents by strengthening the management of customer property to safeguard investors.

New regulations will demand that exchanges have net assets “equal to or more than the amount equivalent to the currency and repayment funds” and also outline measures which cryptocurrency exchanges can employ to safeguard against bankruptcy.

Japan has been developing strict measures to safeguard the space since cryptocurrency began to gain huge popularity in the country. In October, industry self-regulators, the Japan Virtual Currency Exchange Association (JVCEA), were approved by the FSA to be officially recognized in its regulatory position.

Under the new regulations, Japan will refuse registration to those companies who neither “join the accredited association and conform to the self-regulation” nor establish self-regulation. There are currently “three deemed dealers” awaiting approval: Coincheck, Lastroots and Everybody’s Bitcoin.

Such companies are not permitted to advertise aggressively and expand their business while waiting for approval, nor are they able to acquire new customers during this period. Deemed dealers are also required to post their registration status on their websites to clarify their trading status for customers and potential clients.

The report also noted that ICOs “can be subject to the securities regulation” under the Financial Instruments and Exchange Act or the Fund Settlement Act.

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U.S. Rep. Warren Davidson (R) has announced plans to introduce legislation that would clearly regulate cryptocurrencies and Initial Coin Offerings (ICOs), local Ohio news agency Cleveland.com reports Dec. 3.

According to Cleveland.com, Davidson announced his intention to introduce new legislation at the Blockchain Solutions conference. The bill would create an “asset class” for cryptocurrencies and digital assets, which “would prevent them from being classified as securities, but would also allow the federal government to regulate initial coin offerings more effectively.”

This development would bring clarity to U.S. crypto regulation. Currently, state regulatory agencies classify tokens differently in ways that place them under their jurisdiction.

The Securities and Exchanges Commission (SEC) stance is that most cryptocurrencies are securities. The Commodity Futures Trading Commission (CFTC), on the other hand, treats cryptocurrencies as commodities.

In other words, the CFTC states that Bitcoin (BTC) has more in common with gold than with currencies or securities since it is not backed by a government and does not have liabilities attached to it. The Financial Crimes Enforcement Network (FINCEN), the agency managing anti-money laundering (AML) and know your client (KYC) standards, views crypto as money.

The U.S. Office of Foreign Assets Control (OFAC), which enforces economic sanctions, views crypto as money and blacklists wallets of sanctioned persons. Lastly, the Internal Revenue Service (IRS) treats cryptocurrencies as property, meaning that profits from selling them are subject to capital gains tax.

A group of U.S. Congressional representatives sent a letter in September to the SEC Chairman Jay Clayton calling for “clearer guidelines between those digital tokens that are securities, and those that are not.”

The same month, over 45 representatives of major crypto companies and Wall Street firms attended a Congressional roundtable discussion on cryptocurrency and ICO regulation. During meeting, which was hosted by Davidson, experts expressed concerns about a lack of regulatory clarity in the industry and discussed “token taxonomy.”

Davidson has previously demonstrated his support for the crypto industry, suggesting that the ICO market needs “light touch” regulation. A spokesman for the U.S. representative said in November that Davidson is working on a bill that, once law, would treat ICOs as products rather than securities at the federal and state level, effectively “sidestepping” security laws.

As Cointelegraph reported yesterday, seven Ohio funds will hand over $300 million to blockchain startups by the end of 2021. Of this money, $100 million will be invested by nonprofit JumpStart.

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Malaysia will enact regulations for cryptocurrency and Initial Coin Offerings (ICO) in Q1 2019, local English-language news media outlet The Star reported Nov. 28.

The publication quoted finance minister Lim Guan Eng, who said Wednesday said the country’s regulator, the Securities Commission (SC), had updated him with a timeframe for the new rules.

The move will form “part of the SC’s efforts to facilitate alternative fundraising avenues and new investment asset classes,” The Star added.

Malaysia has taken a piecemeal path to regulation of its domestic cryptocurrency industry, originally beginning the process in late 2017.

Authorities have sought to control the sector in the meantime, Lim telling parliament that entities wishing to issue cryptocurrencies must consult the country’s central bank, Bank Negara Malaysia.

“I advise all parties wishing to introduce Bitcoin (style) cryptocurrency to refer first to Bank Negara Malaysia as it is the authority that will issue the decision on financial mechanism,” Cointelegraph reported him as saying Monday.

This month, a Malaysian politician had also recommended putting on hold approval for a government-backed cryptocurrency issuance project until the regulations came into force.

Malaysia has sought to foster its relationship with blockchain this year, November also seeing the Education Ministry set up a university degree verification system using the technology.

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A new World Trade Organization (WTO) report illustrates the burgeoning effect of DLT on global trade with an estimation that the technology could add USD 3 trillion to the global economy by 2030.

WTO’s findings, entitled ‘Can Blockchain revolutionize international trade?’, incorporates not only the effects of blockchain on world trade but also how other sectors such as finance, logistics and transportation, could be impacted by DLT.

This is the second of such reports regarding blockchain technology released by the WTO. Last month, Bitcoin News covered its findings on The future of world trade: How digital technologies are transforming global commerce’. In this report, WTO Director-General Roberto Azevêdo was particularly encouraged by the potential of smaller enterprises to profit from the utilization of DLTs, commenting:

“Beyond easing trade in goods, digital technologies can facilitate services trade and enable new services to emerge. The Report predicts that the share of services trade could grow from 21% to 25% by 2030. Other effects could include, for example, blockchain helping smaller businesses to start trading by supporting them in building trust with partners around the world.”

This latest report continues to outline DLT’s disruptive and influential potential in supply chain logistics; an aspect of the technology recently criticized by Ethereum co-founder Vitalik Buterin, suggesting that lower costings due to emerging technologies such as blockchain will enable smaller businesses to enter the market.

The report also touched on securing and protecting international property rights through blockchain and the building of new trade deals as a result of the efficiency, transparency and cost effectiveness of DLT. These deals could be worth up to USD 1 trillion.

The WTO does offer a note of caution going forward, suggesting that energy consumption, hacking and scalability issues need to be addressed: The report stated:

“…blockchains are highly resilient compared to traditional databases due to their decentralized and distributed nature and the use of cryptographic techniques, they are not completely immune from traditional security challenges…”

The report concludes that international trade may be transformed over the next 15 years but this can only happen with “smart standardization — and smart standardization can only happen through cooperation”.

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Earlier this year, Spain’s tax collection department launched an investigation – which aimed to identify cryptocurrency-related businesses that would have to pay taxes on their capital gains on the investments and revenue they generated from crypto-related activities.

According to local news outlet, El Pais, Spain’s treasury department had requested in April that digital currency and blockchain-focused firms report their earnings and cryptoassets holdings to the nation’s tax authorities.

There were over 60 different institutions that the Spanish treasury had contacted – in order to obtain information regarding how much the institutions had earned from cryptoassets. These organizations included 40 companies that accepted crypto payments, 16 large banks, and several firms that served as intermediaries for crypto transactions (ATM operators, payment technology providers, exchanges).

15,000 Businesses To Pay Taxes On Crypto-related Revenue

El Pais has now reported that Spain’s treasury department has received financial information from local crypto-related companies – which includes about 15,000 firms that owe taxes on their digital currency earnings.

As detailed by local news outlets, any capital gains Spanish firms have made on cryptoassets are subject to a 19 to 23% tax rate. The exact rate is calculated by taking into account the size of a company’s capital gains from its cryptocurrency-related business.

At present, it’s unclear how Spain’s authorities will be collecting taxes as digital currency traders and companies that provide crypto-related products and services claim that filing taxes on their earnings can be a very complicated process.

As CryptoGlobe reported in early October, cryptoasset investors have to gather and sift through their digital currency transaction logs (when filing taxes) – which can be quite challenging as they may have used multiple exchanges or platforms.

Not So Simple To File Taxes On Crypto Earnings

Moreover, crypto investors have to identify trades and separate them from non-taxable transactions such as those that only involve transferring funds from one wallet to another.

It is also difficult for a country’s tax collection department to hold people accountable and make them accurately report and pay taxes they might owe on their crypto-related earnings. Unlike traditional stocks, which pay dividends to their holders, most cryptoasset investments do not offer such returns. So, it may be more challenging for tax authorities to accurately determine how to collect taxes on digital assets.

Additionally, it’s not clear whether Spain’s tax department is willing to accept cryptocurrency as payment from people filing taxes on their earnings from digital assets. Even if authorities accept crypto as tax payment, it may be quite difficult to determine the exact amount that somenone would pay – as digital currency prices have begun to fluctuate wildly again.

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