The new 2024 Revenue Proposal in the US will consider the progressive tax on electricity that is used for cryptocurrency mining. The US Department of the Treasure proposed a tax for energy used in mining of any digital asset, and defines digital assets as: ‘any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology (blockchain)’
Cryptocurrency mining is seen as a wasteful use of energy and the proposed tax would start from 10% in year one (2024), increasing to 30% in the two-year time. The environmental impact is the main reason behind the proposal as the document suggest that: ‘the increase in energy consumption attributable to the growth of digital asset mining has negative environmental effects and can have environmental justice implications as well as increase energy prices’
The instability of the mining operations is also stated as one of the reasons, as the mining industry follows the cheapest energy sources. ‘Digital asset mining also creates uncertainty and risks to local utilities and communities, as mining activity is highly variable and highly mobile.’
Private US company Chainalysis is a leading company in collecting and analyzing data used on cryptocurrency blockchains. In its annual report on cryptocurrency-related crime, they point out that illicit cryptocurrency volumes reach all-time highs amid a surge in sanctions and hacking.
‘Overall, the share of all cryptocurrency activity associated with illicit activity has risen for the first time since 2019, from 0.12% in 2021 to 0.24% in 2022.’ The company assesses that an equivalent of $20.6B is used for illicit activities.
A big part of that sum comes from the offenses related to the economic sanctions on Russia. This shows that a strict regime of sanctions is efficiently imposed on cryptocurrency exchanges, by the US department of the treasury, and international financial institutions. The report describes methods that are used for money laundering and fund transfers. As a key takeaway, Chainalisys points out that the impact of crypto sanctions depends on the jurisdiction and technical constraints.
Ransomware crypto payments
The report shows a decline in ransomware from 2021. Chainalisys claims that ransomware victims increasingly refuse to pay the ransom money hence pushing the criminals out of this scheme. The report is stating that “meaningful disruptions against ransomware actor groups are driving lower than expected successful extortion attempts” In 2021, the US Office of Foreign Assets Control (OFAC) issued an advisory document about the risk of ‘sanction crimes’ that can rise from ransomware payments. OFAC advises all US companies to report ransomware to the FBI prior to any action. This is also considered to be one of the factors for the drop in ransomware payments. In addition, ransomware lifespan is significantly shorter. From 470 days in 2019, it is down to 70 days in 2022.
Money laundering
The report is stating a rise in money laundering activities from $14.2B in 2021 to $23.8B in 2022. The report is stating ‘underground money laundering services’ are a growing concern. Such groups use private channels on messaging apps to set and organise private transactions that are hard to track.
Cryptocurrency scams
Cryptocurrency scams and the use of cryptocurrency on darknet markets are on the decline compared to previous years.
According to a report from Reuters, the world’s largest payment processor companies, Visa and Mastercard, are pushing back the launch of products and services related to crypto, until market conditions and the regulatory environment improve. Visa and Mastercard already have a card issued in partnership with the cryptocurrency exchange Binance, and it offers a fiat-to-cryptocurrency gateway for Binance users.
Anyhow, companies shared concerns about the future of cryptocurrency regulation in a midst of the recent collapse of large players in the crypto industry, such as the FTX. A hard year for crypto companies, pushed Visa and MasterCard to delay the proposed partnerships and decide the way forward after a clearer regulation perspective is established.
At the outskirts of the G20 summit in India, the International Monetary Fund Managing Director, Ms Kristalina Georgieva answered the questions from media around the cryptoassets and digital currencies. In her words, the IMF is very much in favor of regulating the world of crypto and digital money. The IMF, alongside the Bank for International Settlements and the G20s Financial Stability Board (FSB) believes this is a top-priority in the forthcoming period.
She pointed out the difference between legal tenders (national currencies) which are backed by countries that issue them, and the ‘publicly issued cryptoassets and stablecoins calling them ‘just a speculative asset’. If such assets start to pose a threat to the consumers and/or financial stability for countries we should have a mechanism to ban crytpoassets altogether. We have requests from our members not to rule out the mechanism for the total ban. If there are strong consumer protection laws set in place, we will not need a ban. The ban of cryptocurrencies is indeed a tool of last resort, she added in her interview.
In the recent announcement from the Ministry of technology and science of Zambia Mr Felix Mutati, the central financial institutions in Zambia will soon introduce legislation that would regulate the cryptoassests, and in particular Central Bank Digital Currency (CBDC).
The Zambian Minister for technology and science, pointed out in the statement that: ‘there is a need for a policy framework that supports this revolutionary technology.’
In his words, Zambia is seeking the opportunity to embrace this innovative finance technology and will use the regulatory framework ‘as part of deliberate measures to achieve an inclusive digital economy for Zambia’. ‘Cryptocurrency will be a driver for financial inclusion and a change maker for Zambia’s economy’ he added.
Nigeria is the first African country that introduced the digital version of its national currency. The e-Naira currency has been in use for more than a year now, but still lacks mass adoption. In a country of 200 million people, only 0.5% is using e-Naira on a daily basis. The Nigerian government is already using some of the programmability features of digital money, and it’s looking now to enhance them. According to reports from Bloomberg, the Nigerian government is seeking help from the US private tech companies to improve technology behind the virtual currency. Final idea is that at the end of this process, the Central bank of Nigeria achieves full custody and know-how on the technology needed to run a virtual currency environment.
The Nigerian government confirmed that they are looking at: ‘developing additional features and enhancements.”
This action comes after Paxox received a notice from the US Security and Exchange Commission (SEC) that BUSD stablecoin is a financial security and that Paxos needs to register with the Commission. Stablecoins are cryptocurrencies that are pegged to the US dollar or other national currency. The regulatory battle around the stablecoins will continue as Paxos complained to the decision from the SEC. Meanwhile, all deposits of the BUSD will be halted. BUSD is a stablecoin used on a cryptocurrency exchange Binance as a stablecoin pegged to the US dollar. The Binance online exchange is the world’s second largest cryptocurrency exchange based. Binance announced that this will not affect their business.
Stablecoin regulation will be on the agenda of the G20 Finance Ministers meeting on February 24-25 in India. Regulation around this issue might need an overarching regulatory approach.
With the overall goal of identifying deceptive marketing practices across the digital economy, the ACCC plans to analyse influencer marketing practices across several social media platforms such as Instagram, TikTok, Snapchat, YouTube, Facebook, and Twitch. The authority is also looking at the role that other parties such as advertisers, marketers, brands, and social media platforms may have in facilitating misconduct.
Google has committed to introducing changes to better inform consumers about their purchases via Google Store, Google Play Store, Google Hotels, and Google Flights, as a way to comply with relevant consumer protection rules in the EU. The commitment results from a joint action by European regulators, led by the Nederlands Authority for Consumer & Market and the Belgian Competition Authority.
• more precise information on final prices on Google Hotels and Google Flights; • limitation of Google’s right to unilaterally cancel orders or change prices in the Google Store; • more accessible report for regulators regarding illegal content; • make it easier to consumers to find out information about sellers in Google Store and Google Play Store; • feature the option to make purchases using all EU payment methods in Google Store; • improve the application of geo-blocking rules enabling consumers to download their apps anywhere in the EU.
The Consumer Protection Cooperation Network (CPC) will monitor the implementation of these adjustments and commitments, while the EU national authorities will track and enforce compliance where concerns remain.
The US Department of Justice (DoJ) and eight US states filed a lawsuit against Google, accusing it of illegally abusing its dominance over internet advertising business and limiting fair competition.
The lawsuit by DoJ alleges that Google used anti-competitive methods to eliminate or drastically reduce any threat to its dominance over the technologies used for digital advertising. Allegedly, Google has undertaken a systematic campaign to take control of a wide range of high-tech tools used by publishers, advertisers and brokers to facilitate digital advertising and manipulate the mechanics of online ad auctions to force advertisers and publishers to use its tools.
The suit, filed in the state of Virginia, asked the US District Court to force Google to sell its suite of ad technology products, including software for buying and selling ads, a marketplace for completing transactions and an online ad-serving service. The lawsuit also asked the court to stop the company from allegedly engaging in anti-competitive practices.
