Tax services are getting pushy to have crypto declared: Law Decoded, Nov. 27–Dec. 4

December 4, 2023

Last week, His Majesty’s Revenue and Customs (HMRC) presented an unpleasant Christmas surprise to hodlers in the United Kingdom, demanding they declare any crypto holdings they failed to report in the last four, six or even 20 years. The tax authority also reminded taxpayers of the interest, charged daily from the date tax is due until it is paid. As an additional tax on previous-year crypto holdings would now be classified as late, it automatically suggests the interest owed. Failing to include the correct interest will result in a rejection of disclosure. After disclosing unpaid taxes, users will get payment reference numbers and have 30 days to remit the entire sum owed. The disclosure must include “exchange tokens,” such as Bitcoin (BTC), as well as any nonfungible tokens (NFTs) and “utility tokens.”

Less harsh in its demands, the Spanish Tax Administration Agency has also reminded its citizens about their obligations to declare crypto, even if they store it abroad. The Agency published Form 721, the submission period for which will commence on Jan.1 and end on the last day of March. However, only individuals with balance sheets exceeding the equivalent of 50,000 euros (around $55,000) in crypto assets are obliged to declare their foreign holdings. Those who store their assets in self-custodied wallets must report their holdings through the standard wealth tax Form 714.

Brazil will also proceed to tax its citizens’ foreign crypto holdings via a bill already passed in the Chamber of Deputies and expected to be approved by President Luiz Inácio Lula da Silva. Under the bill, any Brazilian who earns more than 6,000 Brazilian reals ($1,200) on exchanges based outside the country would be subject to the tax, effective Jan. 1, 2024. The change makes those funds taxable at the same rate as domestic funds. Funds earned before that date would be taxed when accessed by the owner, and earnings on funds accessed before Dec. 31 will be taxed at 8%.

The SEC is still digging into Binance.US

The United States Securities and Exchange Commission is still looking for evidence that Binance.US had a backdoor to potentially control customer assets similarly to FTX. While Binance and former CEO Changpeng Zhao agreed to plead guilty to breaking U.S. Anti-Money Laundering laws as part of a $4.3 billion settlement with the U.S. Justice Department, Treasury Department and the Commodity Futures Trading Commission, the case didn’t include any of the SEC’s fraud-related claims stemming from its lawsuit with the cryptocurrency exchange in June. However, Judge Zia Faruqui, presiding over the Binance and SEC case, reportedly said the guilty pleas make it less likely that Binance.US and Zhao misappropriated customer assets.

Voyager Digital will settle on $1.65 billion with the FTC

A federal judge has approved an order requiring crypto lending firm Voyager Digital and its affiliates to pay $1.65 billion in monetary relief to the United States Federal Trade Commission (FTC). In the U.S. District Court for the Southern District of New York, Judge Gregory Woods ordered Voyager to pay $1.65 billion following a settlement between the lending firm and the FTC announced in October. Voyager will be “permanently restrained and enjoined” from marketing or providing products or services related to digital assets as part of the agreement.

According to Judge Woods, the order will largely not impact Voyager’s bankruptcy proceedings. The company filed for Chapter 11 protection in July 2022 and disclosed liabilities ranging from $1 billion to $10 billion. In May, the bankruptcy court approved a plan allowing Voyager users to initially receive 35.72% of their claims from the lending firm.

36 companies might get a license to operate in South Africa till the end of 2023

South Africa’s principal financial regulator, the Financial Sector Conduct Authority (FSCA), reviewed 128 applications from crypto asset service providers but intends to discuss only 36 during its next Licensing Executive Committee meeting on Dec. 12. A further 22 applications will be presented on Feb.13, while a final 14 applications will have to wait until March 12. The fate of the remaining applications wasn’t specified by the FSCA, which explained its evaluation method as an assessment that combines Know Your Customer onboarding, data protection, cyber risk management, conflict of interest management, complaints handling, and credit counterparty risk management.

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