The U.K makes a turnaround on KYC rule Abdulrasaq Ariwoola · 11 hours ago · 2 min read
The new rule only requires crypto insitution facilitating the transaction to collect personal data on transactions to unhosted or private wallets.
2 min read
Updated: June 22, 2022 at 12:52 am
Cover art/illustration via CryptoSlate
The U.K. government has pulled back on its plan to collect data on transactions sent to a private or unhosted crypto wallet.
The Treasury made the revelation in an AML/CFT consultation report where it stated that it would not be implementing the proposed data collection. It said feedback received after a July 2021 document announced the proposed rule informed its decision.
The Treasury, in July 2021, released a document that sought to force crypto firms and individuals to collect personal data of transacting parties. This move was to guard against illicit transactions and implement KYC in crypto-asset transfers.
“Cryptoasset firms will need to put in place systems for ensuring that personal information of the originator and beneficiary of a cryptoasset transfer is transmitted and received alongside the transfer, in an appropriate format,” the Treasury said in the document.
The proposed rule would have required crypto exchanges and users to collect data on any transaction between unhosted parties.
However, in the recently released document, the Treasury clarified that it wouldn’t be moving forward with the proposition.
The Treasury in the document said: “Instead of requiring the collection of beneficiary and originator information for all unhosted wallet transfers, cryptoasset businesses will only be expected to collect this information for transactions identified as posing an elevated risk of illicit finance.”
Despite the turnaround, the new rule only transfers the burden of collecting personal information data to the cryptoasset firm facilitating the transaction. In addition, the firms are to collect data for “transactions identified as posing an elevated risk of illicit finance.”
Further, where the firm cannot verify the identity of the beneficiary or sender, it has the discretion to either reject, suspend or allow the transaction.
Compliance with the FATF
The imposition of the rule is the U.K.’s attempt at implementing the AML/CFT standards under Financial Action Task Force (FATF).
Under the FATF, disclosure of the identities of transacting parties forms part of the AML/CFT standards. This informed the Treasury’s prior decision to force the data collection “regardless of the technology used to facilitate transfers.”
As it stands, only crypto institutions facilitating such transfers are to collect personal data.
Albania To Start Taxing Crypto-Related Income From 2023
Authorities in Albania are finalizing regulations that will allow the taxation of income and profits from cryptocurrency investments. The government intends to begin imposing the levy in 2023, after adopting the necessary legislation which has been proposed for public consultations.
Albania Set to Impose Crypto Tax as Early as Next Year
The Albanian state should begin collecting taxes on income from crypto assets as of 2023 in accordance with a new income tax bill, the local English-language portal Exit News reported on Friday. The government also hopes to pass a number of other laws and bylaws this year in order to comprehensively regulate the matter.
The special tax legislation is currently open for public consultations. It introduces the concept of taxing crypto holdings and income derived from virtual assets. The latter have been defined as “a digital representation of a value that can be deposited, traded or transferred in digital form, and that can be used for payment or investment purposes or as a medium of exchange, including but not limited to cryptocurrencies.”
However, the definition does not cover central bank digital currencies (CBDCs), the report notes. That’s despite a growing number of monetary authorities around the world developing a digital version of their national fiats. The list includes major powers such as the United States, the European Union, China, and the Russian Federation.
The Albanian law also defines cryptocurrency mining as an activity using computing power to confirm transactions and gain virtual assets in exchange. The extraction of cryptocurrencies has been a grey area although law enforcement has been going after illegal mining facilities in the country and pressed charges against some of their operators.
Under the new legislation, any income from crypto transactions or mining will be classified as corporate income when it’s received as a result of business activity. And when the beneficiaries are private individuals, they will have to pay capital gains tax of 15%.
Financial Watchdog Tasked to Expand Crypto Regulatory Framework
Earlier this month, the Albanian parliament ordered the Financial Supervisory Authority (AFSA) to prepare and adopt new regulations regarding cryptocurrencies by the end of 2022. Albanian law allows crypto trading platforms to legally work in the country but no licensed entities are currently operating in Albania, Exit News remarked.
Two years ago, Albania also adopted a law titled “Financial markets based on distributed ledger technology.” While many have welcomed the legislation, critics have questioned whether the small nation in South East Europe, still an EU hopeful, is capable of properly regulating its crypto sector to prevent it from being used for money laundering, something it’s struggling to achieve in the fiat space.
The legislature referenced a recent report by the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (Moneyval), which recommended additional steps regarding the risks associated with cryptocurrency. In November 2021, the AFSA approved its first two regulations implementing the crypto markets law, which introduced capital and licensing requirements for entities working with digital assets.
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Do you expect Albania to adopt comprehensive regulations for its crypto space by the end of the year? Tell us in the comments section below.
Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.
Image Credits: Shutterstock, Pixabay, Wiki Commons
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NHL enters the NFT space partnering with Marketplace Sweet
NHL enters the NFT space partnering with Marketplace Sweet Abdulrasaq Ariwoola · 42 seconds ago · 1 min read
The NHL partnership with Sweet will offer a variety of digital collectible experiences to its fans, tradable in the marketplace
Cover art/illustration via CryptoSlate
The National Hockey League on Thursday announced its partnership with NFT Marketplace Sweet. This partnership will be the league’s first dive into digital collectibles.
The partnership, of which the NHL’s players and Alumni’s association are part, will go live in October to mark the start of the 2022-2033 NHL season.
The NHL Marketplace
The NFT marketplace is expected to offer a range of experiences to NHL fans. Including digital collectibles that showcase historical moments, past and present season game highlights, and NHL stars top plays.
The marketplace will also feature gamified collection experiences, specialty packs, and 3D interactive trophy rooms where users can display their collections. Among these offerings there are also dynamic NFTs designed to change based on current team data.
Additionally, fans would be able to buy, sell, collect and trade the collectibles on the marketplace.
However, the announcement did not state which blockchain would host the marketplace.
NFTs in the sporting space
The NHL joins a long list of sporting institutions that have embraced digital collectibles.
In 2020, the NBA launched Top Shot NFTs, its digital collectibles marketplace, in partnership with DapperLabs. Likewise, the NFL launched its play and own NFT game while the MLB is to launch its NFT game soon.
However, the extreme sell-off in the crypto market has seen crypto companies pull out of sports deals. This is so as crypto companies strive to stay afloat as the severe sell-off continues in the market.
FTX recently pulled out of a partnership deal with Los Angeles Angels. Similarly, sources suggest a patch deal between NBA Washington Wizards and a crypto company has crashed.
What Lido staking dominance may mean for Ethereum’s future
What Lido staking dominance may mean for Ethereum’s future Abdulrasaq Ariwoola · 2 hours ago · 2 min read
The Ethereum community has raised fears of lido staking dominance leading to centralization. What does that mean for ETH 2.0?
Cover art/illustration via CryptoSlate
Lido DAO token holders have commenced voting to determine whether the DeFi platform should reduce its staking pool. The vote is a follow-up to a governance proposal released on June 24.
The voting process results from a month-long deliberation over Lido’s staking dominance and whether it should limit itself to curb potential centralization risks.
Lido currently holds 31% of all staked Ether on the Ethereum proof-of-stake blockchain, the Beacon chain. The staking dominance has raised fears within the Ethereum community, and critics fear it will threaten Ethereum’s decentralization.
The vote is expected to end on July 1, and the result will determine whether Lido will self-limit or not. Should the majority of voters vote in favor, another vote will take place on how the self-limiting process should work.
Concerns over stETH dominance
In the governance proposal, Lido stated that its staking dominance would give it more voting power once the Beacon chain goes live. As a platform that started to counter centralized exchanges, it argued that such centralized voting power poses an existential threat to the blockchain.
The Ethereum community has raised similar fears about the centralization of voting powers. The DeFi platform currently has around one-third of all staked Ether, which could give voting leverage once the transition to the Beacon chain is complete.
Vitalik Buterin, the Ethereum co-founder, has argued that no single protocol should have a majority in staking ETH. He opined that such dominance, combined with Lido’s governance structure, is potentially a dangerous point of centralization.
Further, it stated the proposition is premised on the belief that other liquid staking protocols would also limit their exposure. This would effectively allow smaller protocols to meet the supply shortfall.
What Lido staking dominance means for ETH2.0
Ethereum’s transition to a PoS blockchain means it will rely on validators to validate transactions on the blockchain. Unlike a PoW blockchain that requires miners to expend excess energy to solve complex mathematical problems.
However, to operate a validator node, a user must deposit 32 ETH, which is a long shot for many users. Lido, on the other hand, as a staking service provider, allows users to bypass this requirement and earn staking rewards.
According to data from Etherscan, roughly 12.6 million ETH is staked in the ETH2.0, which amounts to 10.6% of the circulating supply of ETH. Of the 12.6 million ETH staked, approximately 4.2 million have been staked through Lido by 73,369 stakers, making Lido the most used staking pool on Ethereum.
This means, should Ethereum transition to its PoS blockchain with Lido still having the lion’s share of the staking dominance, it would give the DeFi platform excessive influence over transaction verification which many warn could pose a risk. Some concerns include validator slashing, governance attacks, and smart contract exploits.
On the other hand, Lido’s staking dominance could help prevent a takeover by a centralized exchange and ensure the blockchain remains decentralized.
stETH remains depegged
The staked Ether, which is supposed to be pegged to ETH, remains depegged after a wave of massive sell-offs. Speculations have profused about the security of the token and whether its depegging could spell more chaos for the crypto ecosystem.
On June 16, Alameda Capital, one of the largest holders of stETH, dumped its stETH holdings, a massive $57 million. This is coupled with the continued financial troubles of Celsius and Three Arrows Capital, both large holders of stETH.
As of the time of press, stETH has not gained parity with ETH and is trading at $1,173.
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