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Assembly Bill 953

Assembly Bill 953 | New Legislation Combines Weed and Stablecoins

Lawmakers in California have introduced a new bill geared towards cannabis companies. Assembly Bill 953 was introduced on February 21st. This new piece of legislation would allow cannabis-related businesses to pay taxes and fees in digital currency—more specifically, in stablecoins.

Assembly Bill 953

If passed, Assembly Bill 953 would allow all California-based tax offices (state, city, and county) to accept stablecoins as a form of payment. Cannabis companies would be able to pay their cultivation taxes with stablecoins. At this time, a specific stablecoin has not been identified, and it remains unknown if all forms of stablecoins will be accepted.

Assembly Bill 953 wouldn’t go into effect until January 1st, 2020, if it is approved at all.

Currently, the state of California imposes a 15% state excise tax on cannabis and cannabis products. Often, cannabis companies owe a large tax amount at the start of each year.

Another issue many cannabis businesses have run into is securing simple financing services from banks. There are a few states that have legalized the use of recreational cannabis, but it is deemed illegal under federal law. Most banks are secured by the Federal Deposit Insurance Corporation (FDIC) and won’t finance ‘illegal’ activity.

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Due to this, cannabis companies hold hundreds of thousands of dollars in cash at any given time. Assembly Bill 953 is not geared towards boosting cryptocurrency or the legitimacy of stablecoins, but more to reduce the vast majority of cash that gets flooded into the tax offices across the state.

California’s State Treasurer, Fina Ma, recently testified in front of the US House Committee regarding the amounts of cash collected. Ma said:

“Duffel bags and sometimes suitcases of cash would arrive quarterly at some of our designated offices and some business owners had to drive 350 miles to pay their taxes.”

It remains unknown at this time when Assembly Bill 953 could be approved.

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SEC ICO Guide Released Despite Ongoing Regulation Debate

In 2018, ICOs raised over $7.8 billion USD—up $1.6 billion from the year 2017. Most of these 2018 funds were raised in the first three months of the year. Cryptocurrencies have been on the decline ever since. Yesterday, the Securities and Exchange Commission (SEC) released their new guide to ICOs. This new SEC ICO guide seems oddly timed, considering the fundraising tactic has decreased dramatically.

SEC ICO Guide

The US regulator released the news of its new guide via Twitter and over its website. There is now a dedicated section on the SEC’s website that lists five aspects of ICOs the SEC considers “essential.” The regulator has also added a section for market professionals and investors.

It remains unknown at this time why it was announced just now, considering the content has existed on the site since March of 2018.

The main ICO guide page explains:

“Companies and individuals are increasingly considering initial coin offerings (ICOs) as a way to raise capital or participate in investment opportunities. While these digital assets and the technology behind them may present a new and efficient means for carrying out financial transactions, they also bring increased risk of fraud and manipulation because the markets for these assets are less regulated than traditional capital markets.”

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The five descriptive aspects the SEC lays out aren’t surprising, given they summarize the organization’s stance on the fundraising tactics from the get-go. The guide explains that ICOs are a security and need to be registered with the SEC regardless of how the issuer refers to it.

In the past, there have been strong debates when it comes to digital currencies being a security in the eyes of the US regulator. Now, the SEC only sees ICO tokens as securities and has left digital currency alone.

In terms of market capitalization, the ICO industry is now just a fraction of what it once was a year ago. While the new SEC ICO guide gives clear direction for investors on how the organization feels, it may be too little too late.

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Canadian-based Kik Said It Will Take on SEC Over ICO

Kik, a Canadian-based cryptocurrency social media startup, has warned the SEC that it would fight back against alleged securities infractions. As first reported by the Wall Street Journal, Kik is fighting back regarding its 2017 initial coin offering (ICO).

Kik Fights Back

During its ICO, the Canadian-based app company raised almost $100 million in ‘kin’ tokens. At the time, the SEC was cracking down hard on ICOs and deeming them as “unregistered securities.” Jay Claton, the SEC Chairman, made a firm stance on ICOs in February of 2018 and said, “I believe every ICO I’ve seen is a security.”

Clayton added:

“I want to go back to separating ICOs and cryptocurrencies. ICOs that are securities offerings, we should regulate them like we regulate securities offerings. End of story.”

It seems Kik has now decided to fight back. Yesterday, the founder and CEO, Ted Livingston, published a blog post in regards to the report issued by the Wall Street Journal. In this post, Livingston stated the crypto startup was ready to take action and go head-to-head with the SEC.

This news comes after the startup was issued a Wells Notice by the SEC on November 16th, 2018. The notice outlines why they believe there was a securities infraction. Immediately following the notice, Kik issued its Wells Response rebuttal on December 7th.

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Now, Kik is waiting to see if the SEC commissioners will make a case against them. The company isn’t challenging the SEC to change its laws to fit crypto but rather is challenging its definition of an investment contract under securities laws.

Kik’s Wells Response explains:

“The Commission has strayed well beyond the scope of its statutory authority to regulate the offer and sale of securities. But [this] attempt to water down the Howey analysis to expand its regulatory authority will not stand up to meaningful judicial scrutiny.”

It remains unknown how long it will take the SEC to respond to Kik’s challenge.

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Malaysia Regulates Cryptocurrencies | New Rules that Must be Followed

Malaysia regulates cryptocurrencies as of today. The new rules affect both digital coins and ICOs (initial coin offerings). Though welcomed by many, the repercussions for those who don’t comply are deemed particularly harsh.

What will this mean for trading?

Malaysia Regulates Cryptocurrencies

The country’s Minister for Finance, Lim Guan Eng, announced that the order to regulate cryptocurrencies and initial coin offerings as securities has come into force—effective today, January 15th.

Launching an unauthorized ICO or exchanging in cryptocurrencies without approval could result in a 10-year jail term and a $2.4 million USD fine:

“Any person offering an ICO or operating a digital asset exchange without SC’s approval may be punished, on conviction, with imprisonment not exceeding 10 years and fine not exceeding RM10mil [$2.44 million].”

Ouch.

Pro Crypto

Despite the harsh repercussions for illegal trading, Malaysia is predominantly pro cryptocurrency. The minister stated:

“The Ministry of Finance (MOF) views digital assets, as well as its underlying blockchain technologies, as having the potential to bring about innovation in both old and new industries. In particular, we believe digital assets have a role to play as an alternative fundraising avenue for entrepreneurs and new businesses and an alternative asset class for investors.”

Trading

So what does this mean for traders as Malaysia regulates cryptocurrencies?

An official framework will be launched by the end of Q1 this year. This will detail the exact regulatory requirements for launching an ICO and trading on digital exchanges in the country. In general, crypto services and exchanges must obtain authorization from Malaysia’s Securities Commission. This body will work with the central bank to ensure compliance.

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As stated above, without official approval, traders face serious charges if caught.

The Capital Markets and Services Order 2019

Called ‘The Capital Markets and Services Order 2019,’ the next few months will prove crucial as traders and exchanges work to comply with the new relevant securities laws and seek approval by the commission.

India also recently regulated cryptocurrency. It spent most of 2018 implementing regulations for crypto services in its country.

Featured Image: Depositphotos © sinenkiy

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Denmark Crypto Taxes | It’s Making Sure You Pay Em!

There’s no getting around Denmark’s tax agency, Skattestyrelsen, so don’t even try. The agency is pursuing Denmark crypto taxes with vigor and is leaving no stone left unturned!

Denmark Crypto Taxes

Skattestyrelsen has confirmed that approximately 2,700 individuals owe taxes on Bitcoin gains, according to a release it made earlier.

These individuals reportedly bought and sold Bitcoin via a Finnish cryptocurrency exchange between 2015 and 2017. However, they have yet to declare any profits or losses on their tax documentation. Whoops!

It’s now an agency priority to chase down these people and make them pay their dues.

Tax Director Karin Bergen commented:

“Right now we are identifying the individual citizens and keeping the new information up to those we already have […] If something does not match, we will contact them and ask for more information. However, how many people it is and what it may mean, it is still too early to say.”

Denmark Crypto Taxes: Tip-Off

But the agency didn’t just unearth this news. Rather, it received a tip-off believed to have come from the Finnish tax authorities. It is still unknown which exchange is involved, but LocalBitcoins has been touted as a potential, as it is one of the biggest international P2p Bitcoin trading platforms around.

It also just so happens to be Finland-based.

The platform recently brought in limited Anti-Money Laundering and Know Your Customer processes for “high volume” account holders.

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Tip of the Iceberg

The 2,700 individuals purchased $7.55 million worth of Bitcoin and sold $8.05 million worth. Bergen believes that figures like these are “probably just the tip of the iceberg.”

She continued:

“The knowledge we gain about data mining, segments and methods in general will make us wiser in the area and benefit from our guidance and control work.”

The attitudes in Denmark towards cryptocurrency are mixed. The country is moving towards adoption with a total of 1,500 restaurants accepting Bitcoin via an online portal. However, not paying your Denmark crypto taxes may create a few sour faces towards the digital asset.

America faces similar issues regarding crypto taxes. Tax agency Credit Karma reported that fewer than 100 people out of 250,000 declared any gains or losses on cryptocurrency in 2018.

Featured Image: Depositphotos/© Thamkc

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