Welcome to Barmy’s Daily Crypto News – November 8th, 2022
1. The top 10 most-cited possible risks no longer include cryptocurrency
While supporters of conventional finance are still adamant that Bitcoin and the cryptocurrency ecosystem are financial hazards, a survey by the Federal Reserve Bank of New York, one of the country’s 12 federal reserve banks, discovered 11 characteristics that will make crypto less risky in 2022.
A central bank survey conducted by the Federal Reserve System indicated that some of the most often mentioned possible threats for the U.S. economy were geopolitical tensions, foreign divestments, COVID-19, and high oil costs. Cryptocurrency is ranked 11th out of 14 reasons that can put your finances at danger, showing that investor perceptions have changed as a result of the tireless work of crypto entrepreneurs to spread awareness.
The power struggle between the world’s economies, which includes, among other things, tensions between the United States and China, the war in Russia and Ukraine, higher energy prices, rising inflation, the COVID-19 pandemic, and cyberattacks, was the subject of some of the respondents’ most urgent risk concerns.
When assessing the dangers associated with investing in cryptocurrencies, the U.S. central bank continues to hold a negative view of the technology. The collapse of the Terra environment was also mentioned by the central bank, which highlighted the fact that companies with direct exposure to the internally stable TerraUSD (UST) experienced financial difficulties, which occasionally resulted in bankruptcy.
2. U.S. Regulator Wins Judgement Against Decentralized Blockchain Platform LBRY
In accordance with court records, the Securities and Exchange Commission (SEC), the country’s regulatory watchdog, successfully asserted that LBRY offered an unregistered security in violation of section 5 of the Securities Act of 1933. In addition, the SEC seeks injunctive relief from the alleged proceeds of LBRY’s LBC token.
Judge Paul Barbadoro granted the SEC’s move for summary judgment notwithstanding LBRY’s arguments that the blockchain token was not a security but rather a crucial part of the LBRY blockchain network. Because LBRY did not hold an initial coin offering (ICO), in contrast to numerous other cryptocurrency ventures, the company claims that the SEC’s ruling and the wording used in the summary judgment establish a “extraordinarily dangerous precedent.”
Due to the risky precedent, “any cryptocurrency in the U.S. could be treated as a security, including Ethereum,” according to LBRY. The LBRY team said they intended to recover by “licking our wounds for a little while,” but they also stressed that “they’re not giving up.”
Many people are debating whether or not the US regulator would target other decentralized crypto assets in light of the LBRY case. Gary Gensler, the chairman of the SEC, stated during the second week of September that he wants the SEC to improve crypto compliance.
The regulator added that he thinks “the vast majority of the almost 10,000 tokens in the cryptocurrency market are securities.” Regarding regulatory clarity, Gensler stated in mid-July that the SEC was examining “tokens, the stablecoins, and the non-stablecoins.”
3. OpenSea launches a new “on-chain” tool helping creators enforce royalties
By introducing a new “on-chain” tool that aids producers in enforcing royalties, OpenSea appears to have taken a side in the fight over NFT royalties. While other players in the market have been implementing their own tactics over the past few months, the NFT marketplace, which according to CoinGecko controls 66% of the market share in NFT marketplaces, has remained largely silent on the subject of royalties and enforcement.
OpenSea CEO Devin Finzer wrote in a blog post on November 6 that they’ve “seen the voluntary creator fee payment percentage decrease to less than 20%” in marketplaces where payments are optional, while in other marketplaces creator fees are “just not paid at all.”
The CEO of OpenSea announced the debut of a new tool in the marketplace that will enable authors to deliver “on-chain enforcement” of their royalties. Finzer added that while OpenSea will use an on-chain enforcement tool to impose royalties for new collections, it won’t do so for new collections that don’t opt-in. OpenSea is not forcing people to utilize their specific solution. Instead, creators are free to use whatever solution you choose and execute it anyway.
Only severe measures with the community, such as moving the canonical collection to a new smart contract, can result in on-chain creator fee enforcement for existing collections with non-upgradable smart contracts. Finzer suggests possibilities including enabling optional creator fees, continuing to enforce off-chain payments for select subsets of collections, and working together on further on-chain enforcement options for creators.
4. CBR will integrate crypto assets and blockchain technology into its local financial system
In the midst of a wave of new financial penalties, the Central Bank of Russia (CBR) is exploring methods to incorporate blockchain technology and crypto assets into its domestic financial system. The CBR issued a public consultation study titled “Digital Assets in Russian Federation” in a Telegram post on November 7th. It evaluates whether the sanctioned state might allow foreign digital asset issuers, especially those from “friendly countries,” access to its domestic market.
The paper also includes recommendations for reforms in accounting and taxation, protections for small investors, regulation of digital assets, and rights to digital property connected to smart contracts and tokenization.The CBR declared that it firmly supports the “further development of digital technologies,” so long as they don’t expose customers to “uncontrollable” hazards in terms of their finances or cybersecurity.
The same regulatory guidelines that apply to the issue and circulation of conventional financial instruments should also apply to digital assets, according to CBR, notwithstanding the fact that blockchain technology is still in its infancy. According to the CBR, short-term regulation should concentrate on safeguarding investor rights, tightening up the requirements for putting digital assets into circulation, making sure the issuer is accredited, and making sure the issuer discloses all pertinent information to investors.
Although a legal foundation for digital assets has been established, the Central Bank stated in a Telegram message that better regulation is necessary for the industry’s future development.
5. IRS Building ‘Hundreds’ of Cases to Crack Down on Tax Evasion via Cryptocurrency
According to a Thursday report from Bloomberg, the Criminal Investigation Division (CI) of the Internal Revenue Service (IRS), the tax authority’s law enforcement arm, is developing “hundreds” of crypto cases. According to CI chief Jim Lee, who was quoted in the article, many of the cases would soon be made public.
During a news conference, Lee stated that the charges mainly involve cryptocurrency exchanges for fiat money and individuals neglecting to disclose cryptocurrency transfers. The head of CI highlighted that while most instances in the past included money laundering, he has “truly noticed a shift” in investigations involving digital assets during the past three years.
The Office of Cyber and Forensic Services (CFS), which the tax authorities formed last year, unifies the investigation of digital assets, cybercrime, digital forensics, and physical forensics. According to Lee, the office can virtually track any cryptocurrency transaction.
The CFS is continuously improving, especially as challenges emerge in fields like decentralized finance [defi], peer-to-peer payments, and cryptocurrencies with improved anonymity. Because there aren’t many resources available, the CFS concentrates on situations where they can make a big difference.
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