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Investment Bank and Cryptocurrency Exchanges Expand Crypto Services

By <a href="https://www.bakerlaw.com/RobertAMusiala">Robert A. Musiala Jr.</a>

This week a U.S. investment bank announced the public launch of its digital asset division. According to a press release, “the new division offers full-service trade execution and custody solutions on a platform that provides institutional clients with secure and compliant access to the digital asset ecosystem.”

In another recent development, Coincheck, one of the largest cryptocurrency exchanges in Japan, announced “a definitive agreement for a business combination that would result in the combined entity being a publicly listed holding company, domiciled in the Netherlands, with Coincheck as its wholly-owned subsidiary.” According to a press release, “[u]pon closing of the transaction, the resulting holding company will be named Coincheck Group, N.V. and expects to be listed on the Nasdaq Global Select Market under the ticker symbol CNCK.”

According to recent reports, cryptocurrency exchange Blockchain.com has completed the acquisition of an “over-the-counter” trading desk for cryptocurrencies with operations in the Asia-Pacific region. And in a separate development, a major U.S. cryptocurrency exchange has reportedly received an electronic money license from the Central Bank of Ireland. According to reports, the license will allow the exchange “to issue electronic money, provide electronic payment services and handle electronic payments for third parties” and “enable the company to passport those services to European Economic Area countries.”

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From Australia to Africa, Cryptocurrency Sees Continued International Adoption

The Australia and New Zealand Banking Group (ANZ) recently announced that it has launched its own stablecoin (A$DC), a bank-minted digital asset backed 1:1 by the Australian dollar. ANZ is reportedly the first Australian bank to mint a stablecoin tied to the Australian dollar. According to reports, ANZ will partner with a private wealth management firm to custody the 30 million A$DC tokens minted by the bank.

The Bank for International Settlements (BIS) Innovation Hub announced this week that it has developed prototypes for a shared platform for the settlement of central bank digital currencies (CBDCs), in partnership with the central banks of Australia, Malaysia, Singapore and South Africa. The joint effort, dubbed Project Dunbar, aims to create a common platform for international settlements using multiple CBDCs. “Project Dunbar demonstrated that key concerns of trust and shared control can be addressed through governance mechanisms enforced by robust technological means, laying the foundation for the development of future global and regional platforms,” said the head of the BIS Innovation Hub in a statement released with the announcement.

In a final notable item, a recent report indicates that cryptocurrency adoption in Africa increased by 2,500 percent in 2021 alone. The report, released by a major Singapore-based cryptocurrency exchange, notes that more than 88.5 percent of African cryptocurrency transactions were cross-border transfers. In an interview, the CEO of the exchange predicted that adoption of digital assets in Africa will continue to grow exponentially. “African countries have the highest crypto adoption rate in the world, outperforming even the biggest regions such as the United States, Europe and Asia,” the CEO said.&nbsp;

ApeCoin Drops; Juno Holders Confiscate Funds; Polygon Integrates Simba Chain

By <a href="https://www.bakerlaw.com/VeronicaReynolds">Veronica Reynolds</a>

ApeCoin launched last week after much anticipation, with Yuga Labs, parent company of nonfungible token (NFT) project Bored Ape Yacht Club (BAYC), reportedly planning to “adopt ApeCoin as the primary token for all new products and services.” According to the ApeCoin website, the new token will “serve as a decentralized protocol layer for community-led initiatives that drive culture forward into the metaverse” and will be owned and operated by a decentralized autonomous organization (DAO).

Cosmos-based blockchain Juno network also turned heads last week with news related to on-chain governance, when the JUNO token community passed a governance proposal to confiscate the funds of a very large holder of the JUNO token (also known as a “whale”) that had been accused of manipulating an airdrop planned around the launch of Juno network. According to reports, “[t]he plan is extremely notable because it appears to mark the first major instance of on-chain governance being used to change a user’s token balance.” The approved proposal will result in a backward-incompatible change to Juno’s code, also known as a “hard fork.”

In another recent blockchain protocol development, Polygon (MATIC), a “layer two” cryptocurrency and scaling solution connected to Ethereum, has integrated Simba Chain, an API development platform focused on Web3 infrastructure development. Simba Chain reportedly will offer companies tools to develop infrastructure to support their Web3 products and services as well as to “build and run custom, white-label NFT Marketplaces for their customers.”

Congressmen Question SEC on Crypto; OECD and IRS Address Crypto Taxation

By <a href="https://www.bakerlaw.com/LaurenBass">Lauren Bass</a>

Last week, a bipartisan group of congressmen sent a letter to the chair of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, expressing concern over the SEC’s potential use of “investigative functions to gather information from unregulated cryptocurrency and blockchain industry participants.” Suggesting that such requests might “be at odds with the Paperwork Reduction Act,” the eight authors asked the SEC to provide details on recent information-gathering practices. Rep. Tom Emmer (R-Minn.), chair of the Congressional Blockchain Caucus, released the following statement in connection with the letter: “The SEC must ensure that its information-seeking requests to private crypto and blockchain firms are not overburdensome, unnecessary, and do not stifle innovation.”

Earlier this week, the Organisation for Economic Co-operation and Development (OECD), an international intergovernmental forum, proposed a new global tax transparency framework to help facilitate and standardize the reporting and exchange of information related to cryptocurrency assets. According to a press release, the Crypto-Asset Reporting Framework (CARF) will help provide “for the collection and exchange of tax-relevant information between tax administrations” for various types of crypto-asset transactions, including decentralized finance. Among other things, CARF proposes amendments to the Common Reporting Standard expanding its scope to cover “electronic money products” and Central Bank Digital Currencies (CBDC) and to streamline reporting with CARF to limit unnecessary duplication.

In related news, the IRS last week released updated guidance to U.S. taxpayers on how to properly report cryptocurrency holdings and transactions on their 2021 Form 1040s. According to a press release, all taxpayers filing Form 1040 must answer yes or no to the following question: “At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?” The guidance outlines specific conditions for when one should answer affirmatively or negatively.

Firms Expand Crypto Services; Networks Implement DAOs and Integrations; Congressmen Address SEC on Crypto; IRS and OECD Address Crypto Tax