Tangible wins, new menaces and the global crypto taxation drive, Feb. 17

Every global event or major political crisis these days can trigger a digital asset-related conversation. As China welcomes the worlds top athletes to the Beijing 2022 Winter Olympics, showing off ultra-high-tech facilities and sports infrastructure, some United States politicianshave raised concerns over the Games potential to act as a booster to the digital yuans adoption. In neighboring Myanmar, the military government that had overthrown the nations elected leadership a year ago is now looking into launching its own digital currency, not to project economic influence but to improve the domestic payments system and the struggling economy more broadly.

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The many good things

Last week brought several favorable developments on the U.S. regulatory front. In a major win for the crypto industry, the House of Representativespassed the version of the America COMPETES Act without a provision that could have allowed the Treasury to suppress and surveil certain financial transactions without due process. The provision and its potential to endow the government with unchecked power to censor transactions have come to light thanks to crypto advocacy group Coin Center and other allies.

Another setback for the IRS came from the courtroom. The agency offered a Tezos block validator who had sued the IRS over staking rewards taxation a settlement that included a refund of the taxes paid. The plaintiff, however, took aprincipled stand and turned down the offer, realizing that the entire proof-of-stake industry could benefit from a court ruling in this case.

Threats old and new

It wasnt all rosy, though. As the Treasurys semi-annual regulatory agenda revealed, the notorious unhosted wallet rulecould be back on the table. First proposed in late 2020, the rule would require crypto exchanges to collect and report transaction data and personal information of anyone who transacts with self-custodied crypto wallets i.e., those not maintained by an intermediary. The rule would be triggered if, for example, a user of a regulated exchange withdrew upward of $3,000 to their private wallet.

Another source of potential regulatory pressure is a recent proposal by the Securities and Exchange Commission that seeks toextend the definition of an exchange to include communicational protocol systems. This would likely encompass DeFi protocols that facilitate the trading of digital assets that the SEC deems to be securities i.e., most crypto assets.

If you cant beat them, tax them

Judging from last weeks news, a good number of nations that have been flirting with the idea of a blanket ban on digital assets might be having second thoughts upon appreciating how much tax revenue is there waiting to be extracted. The Russian government has come up with aneye-popping estimate of its citizens (potentially taxable) aggregate crypto holdings, which can reportedly weigh on the scales of the ongoing debate between the nations central bank and finance ministry on whether to ban or regulate crypto. Over in India, the finance ministry has announced that a CBDC is to launch later this year or the next, along with a 30% crypto tax. Rising adoption has also inspired Colombias tax authority toannounce a crackdown on crypto tax evasion, while in Venezuela, the government is looking to imposea new 20% tax on certain crypto transactions.