This week's newsletter takeaways:
Binance to Suspend US Dollar Transfers Using Bank Accounts
Trust Wallet Hacked With Estimated Damage of $4 Million
Australia Releases Token Mapping Framework
Hong Kong to Set Out Pathway For Stablecoin Issuance
Crypto-asset firms marketing to UK consumers must get ready for financial promotions regime
India implemented a 30% profit tax and a 1% tax deducted at source (TDS) on all cryptocurrency transactions from 2022 to 2023.
The United Arab Emirates published crypto regulations 2023
Industry News
Binance said they will suspend deposits and withdrawals of US dollars via bank account and its US banking partner Signature Bank would no longer process users’ transactions less than $100,000. Meanwhile, CEO Changpeng “CZ” Zhao mentioned that some banks are now pullback their support for crypto on Twitter.
![Twitter avatar for @cz_binance](https://substackcdn.com/image/twitter_name/w_96/cz_binance.jpg)
Apparently, he pointed out that their consumers for USD bank transfers only occupied 0.01% as active Binance users, but they’re planning to find new partners in the upcoming weeks and hopefully will restart the services back soon. Increasingly, the banks in the U.S. are refusing to accept wire transfers for the crypto markets-especially after the collapse of FTX turmoil and the heightening warning signs from U.S. regulation towards this market.
Crime
Trust wallet was hacked and lost for around $4 million of USDC.
The $4 million worth of USDC was then almost entirely converted into Ether ETH tickers down $1,547, wrapped-Bitcoin (wBTC) and Tether USDT tickers down $1.00 via 1 inch’s swap feature”.
According to Trust Wallet, the offender is a gang with its headquarters in Rome; Perpetrators take over others’ wallet addresses by tricking users into installing malware and giving KYC information in exchange for an NDA PDF. The co-founder of Web3 metaverse game engine “Webaverse”, Ahad Shams claims “The thieves could not have possibly seen the private key, nor was he connected to a public WiFi network at the time.” They just took a picture of their wallet balance and then may get access and control their wallet. Mr. Safra was the major criminal who pretended to be an investor while. The CEO of Trust Wallet claims this scam is likely to be an organized crime and in-person OTC fraud in Europe, especially in Milan and Barcelona.
![Twitter avatar for @0xngmi](https://substackcdn.com/image/twitter_name/w_96/0xngmi.jpg)
![Image](https://substackcdn.com/image/fetch/w_600,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fpbs.substack.com%2Fmedia%2FFoSvO2WWcAE6_kZ.png)
Regulations
🇦🇺Australia—Token Mapping
The government published “Token Mapping” on February 3rd. Australian Treasury in which they are seeking feedback on their proposed approach to the regulation of stablecoins. The policy considerations that need to be taken into account when regulating stablecoins. The consultation proposal aims to regulate stablecoins in a way that balances the potential benefits of the technology with the need to protect consumers and maintain financial stability. The key aspects of the proposal include: the definition of stablecoins, regulation of issuers, consumer protection, financial stability, anti-money laundering and counter-terrorism financing. For more details on each aspect, check here.
🇭🇰Hong Kong—Stablecoin Issuance
At the end of January, Hong Kong Monetary Authority(HKMA) published the conclusion of discussion paper on crypto-assets and stablecoins. In response to the discussion paper on crypto-assets and stablecoins, HKMA has received a total of 58 submissions from the industry like public bodies, business and professional organizations, and individuals, etc. As for the HKMA stablecoin issuers, they will also be subject to stringent AML/CFT and consumer protection standards, as well as regular audit and transparency obligations. The HKMA will publish the developing policies and procedures, and the next moves in due course. Please be updated on HKMA official website for upcoming news.
🇬🇧UK—New Financial Promotion Regime
The new UK financial promotional framework will soon require compliance from all crypto asset businesses, including those with overseas offices and those marketing to UK customers. The Financial Conduct Authority (FCA), the regulatory body overseeing financial markets in the UK, has recently introduced new rules for the marketing of cryptoassets to retail consumers.
Cryptoasset firms must comply with the FCA's financial promotions regime, which requires them to be authorized and have their promotions approved by an authorized person. In addition, the promotions must include certain disclosures and information to help consumers understand the risks and benefits of investing in cryptoassets. Failure to comply could result in enforcement action by the FCA, including fines and sanctions. If not following the requirements of promotions, individuals will be in breach of section 21 of the Financial Services and Markets Act 2000 (FSMA), which is a criminal offense punishable by up to 2 years imprisonment.
The promotion is communicated by an FCA authorised person.
The promotion is made by an unauthorized person but approved by an FCA authorised person. Legislation is currently making its way through Parliament which, if made, would introduce a regulatory gateway that authorized firms will need to pass through in order to approve financial promotions for unauthorized persons.
The promotion is communicated by a cryptoasset business registered under the MLRs with the FCA.
The promotion otherwise complies with the conditions of an exemption in the Financial Promotion Order.
🇮🇳India—Crypto Tax Rule from 2022 in 2023
In India, the income from cryptocurrency transactions is considered taxable. According to the Indian Income Tax Act, income from any source, including cryptocurrencies, is taxed as per the applicable slab rate for individuals. This means that the amount of tax you owe on your cryptocurrency income will depend on your overall income and tax bracket. It's important for individuals who hold or trade in cryptocurrencies to keep proper records of their transactions and declare their cryptocurrency-related income while filing their taxes. According to Coindesk, the largest democracy in the world imposed high taxes on cryptocurrency transactions: a 30% profit tax and a 1% tax deducted at source (TDS) on all transactions.
The 1% TDS is still in place, but up until this point, there was no legal provision that enforced a fine for noncompliance if a citizen attempted to avoid paying the tax or made an incomplete payment. A retailer could contend in court that no punishment is required, only having to pay tax. Now, failure to comply could result in a fine equal to the tax debt and/or a prison sentence of 3 to 84 months.
Indian retailers who are on foreign platforms usually use [peer-to-peer] mechanism to buy and sell crypto," said Rajat Mittal, a crypto tax lawyer at India's Supreme Court. "A retailer who is responsible for making payment to a buyer on P2P platform is liable to deduct TDS. If users don't deduct TDS now they could be made liable for a penalty of 100 percent in addition to TDS liability already imposed and the possibility of 3- to 84 month jail term.
🇦🇪The United Arab Emirates—Dubai’s Virtual Asset Regulatory Authority(VARA)
The United Arab Emirates published crypto regulations, which sets licensing and authorization requirements for virtual asset companies and issuers looking to operate in Dubai. The regulations aim to promote the growth and adoption of virtual assets while also ensuring that these activities are conducted in a safe and secure manner, in line with international best practices.
This includes the issuance of virtual assets, the operation of virtual asset exchanges and other virtual asset service providers, as well as the custody and safeguarding of virtual assets. It is important for virtual asset issuers, exchanges, and service providers to familiarize themselves with the regulations and to take the necessary steps to comply with the requirements outlined in the regulations. This includes implementing appropriate security measures, maintaining accurate records, and regularly reporting to the VARA.
Who Are We?
Chaintool is a Web 3.0 company located in Singapore, dedicated to comprehensive risk control management products. It is composed of a team of fintech experts, artificial intelligence, and blockchain industry experts. The company's mission is to foster the economics of Web 3. We offer holistic risk management solutions for crypto companies and DeFi protocols with our AI-powered compliance and investigation software. Our one-stop products are end-to-end solutions targeted at meeting the real needs of our clients. Our user-friendly interface with instant risk alerts provides clients with easy-to-use experiences. The product provides our customers with real-time monitoring and management of crypto-currency transaction risks.
Sources from: Binance.com, Bloomberg, Bloombergbusiness, Elliptic, Cointelegraph, Coindesk, the treasury of Australia Government, Hong Kong Monetary Authority, UK Financial Conduct Authority, TaxGuru.com, Government of Dubai, Virtual Assets Regulatory Authority.