News Updates August 04, 2022

1. Bitcoin Holds above $22,792 as Bulls and Bears Reflect the Next Move

Bitcoin (BTC) has fallen for the second time after failing to break above the upper resistance level of $24,000. The largest cryptocurrency has fallen to the low of $22,792.

There is a probability that Bitcoin will hold above the current support. In other words, the uptrend will continue if the price holds above the moving average lines. A rebound will catapult Bitcoin above the overriding resistance of $24,000. The bullish momentum will extend to the high of $28,000. However, if the bears break below the current support, the cryptocurrency will retake the previous low at $20,724. At the time of writing, Bitcoin is trading at $22,974.

 *Bitcoin indicator reading*

Bitcoin price is at level 53 of the Relative Strength Index for the period 14. Bitcoin is trading in the bullish trend zone as it finds support above the moving average lines. The uptrend could continue if the BTC price holds above the moving average lines. The cryptocurrency is above the 50% area of the daily stochastic. The market is resuming its bullish momentum. The 21-day line SMA and the 50-day line SMA are still in a downtrend, indicating a downtrend. 

 *What is the next direction for BTC?*

Bitcoin has pulled back above the moving average lines as bulls and bears ponder the next move. BTC price will rise again if it holds above the moving average lines. Likewise, selling pressure will resume if the price falls below the moving average lines.

2. Twitter chases Citadel’s founder, Binance in a race of subpoenas
The company is gathering all the possible information on Elon Musk's private claims about its number of fake accounts.

As the failed acquisition of social platform Twitter by one of the world's richest men, Elon Musk, turned into a protracted court conflict, both sides are filing subpoenas to gather information ahead of the first hearing. 

Recent reports claim that Twitter has made an effort to serve subpoenas to Ken Griffin, the founder of hedge fund Citadel, and to major crypto exchange Binance.

According to Bloomberg on Aug. 1, the delivery was attempted at both the Citadel office on Lexington Ave., New York, and at Griffin’s Manhattan residence. The company reportedly refused to accept the legal papers on Griffin’s behalf, alleging that the only option was to deliver the subpoena to the Chicago office.

As Yahoo Finance reports, on the same day Twitter directed subpoenas to Binance and a dozen of Musk’s other advisers and potential lenders in the deal. The subpoenas demand the receivers hand over communication evidence that might support or refute Musk’s suggestion that the social network has under-reported the number of fake or “spam” accounts present on the platform.

3. UK Parliamentary Group Starts Crypto Inquiry to Form Policy Recommendations

The cross-party group is asking industry experts, regulators and the government to weigh in on a range of topics including consumer protection and CBDCs.

A cross-party group of U.K. lawmakers has started an inquiry into the country's crypto industry with a focus on regulation.
The Crypto and Digital Assets All Party Parliamentary Group (APPG) is looking to compose a report with policy recommendations and will share its findings with the government, the group said Thursday.

The group is canvassing views from industry experts, crypto service providers, regulators and members of government on a range of topics including the U.K.'s current approach to regulating digital assets, the role of local regulators, the potential of central bank digital currencies (CBDC) and concerns related to financial crime and crypto advertising.

The inquiry comes shortly after July's introduction of a bill that includes provisions to bring payments-focused digital assets like stablecoins – which are pegged to the value of real assets like fiat currencies – into the scope of regulation.
As the U.K. maps its own path following Brexit, the stablecoin rules are expected to be part of a larger effort by the government to transform the state into an international crypto hub. The APPG inquiry plans to assess if the current approach to regulating crypto is aligned with the government’s ambitions, and look at what other countries are doing, it said

Following the recent crypto market slump, which has seen several companies collapse and billions of dollars lost, regulators worldwide are scrambling to set up more robust crypto rules. Other major economies including the European Union and the U.S. have rules for stablecoins as well as licensing frameworks for crypto service providers in the works.
"It's vital that the U.K. does not take its foot off the gas and that government and regulators keep to their commitments when it comes to crypto and digital assets,” Lisa Cameron, a Scottish National Party MP and the chair of the group, said in a statement

The cross-party group, founded in 2021, is made up of members from both houses of Parliament. The APPG will be accepting written submissions on the detailed topics until Sept. 5.

4. Crypto Groups in Japan Release Fiscal 2023 Tax Reform Request

The Japan Crypto-Asset Business Association (JCBA) and the Japan Crypto-Asset Exchange Association (JVCEA) have published a tax reform request for 2023. The request calls for separate taxation of crypto at a rate of 20%, among other things.

The Japan Crypto-Asset Business Association (JCBA) and the Japan Crypto-Asset Exchange Association (JVCEA) have together released a tax reform request for crypto assets. The Fiscal 2023 Tax Reform Request speaks about several issues, which the two groups see as an obstacle to the growth of the industry.

Those issues include the need to facilitate tax filings, a lack of consistency within the system, comparison with overseas crypto asset tax systems, and the importance of crypto assets in Japan’s web3 strategy. The latter seemed to be a key point in the tax reform request, with Gaku Saito, Chairman of the Tax System Study Group, saying,

“If the Japanese government makes Web 3.0 a national strategy, the frequency with which the public will come into contact with crypto-assets will inevitably increase dramatically… making it easier to hold will lead to the spread of Web 3.0 and contribute to the development of the market.”

The request calls for separate taxation of crypto at a rate of 20%, with a loss that can be carried forward from the income amount related to crypto assets for three years from the following year. This would also apply to derivative transactions.

Crypto advocacy groups in Japan have been working hard lately to ensure that the crypto industry can flourish. These groups recently petitioned the government to relax corporate tax regulations, fearing that it would lead to an exodus of talent. The groups also want to reduce the present rate of taxation on individual investors from up to 55% to 30%.

Existing financial institutions are also beginning to take note of crypto. In July 2022, it was revealed that Japanese trust banks could get the green light for crypto custody, as the FSA is aiming to strengthen investor protection by deregulating trust banks.

Many countries are wondering how to go about the issue of taxing the crypto asset class. Notably, South Korea delayed its crypto tax plans again, pushing it back to 2025. Other countries like India have imposed harsh tax rules that have caused trading volumes to plummet.

Investors will have to deal with crypto taxation soon or later, as the asset class becomes more widely adopted. This along with general regulation will bring some difficulties in the short term but will legitimize the market.

5. Breaking: Elizabeth Warren Wants To Cut Ties Between Crypto And Wall Street

U.S. Senator Elizabeth Warren continues her anti-crypto stance with another effort to reduce the Wall Street foray into the crypto market. Elizabeth Warren, a member of the Senate Banking Committee, urges committee members and Senators to sign a letter to the Office of the Comptroller of the Currency (OCC) calling for the withdrawal of crypto services offered by banks.

 *Elizabeth Warren Seeks to End Wall Street Banks’ Support for Crypto* 

U.S. Senate Banking Committee member Elizabeth Warren urges Senate members to sign a letter seeking to withdraw an OCC guidance for banks to offer crypto services such as crypto custody. The committee believes the crypto guidance helps Wall Street banks foray into the crypto market, increasing risks for the banking system.

The letter recommends the OCC create an alternative crypto approach with the Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) “that adequately protects consumers and the safety and soundness of the banking system.”

The Senate Banking Committee will send the final version of the letter to OCC Acting Comptroller Michael Hsu. In a request for comment, an OCC representative referred to Michael Hsu’s recent comments on concerns over the increasing foray of banks into crypto. It shows OCC Michael Hsu’s interest in changing the crypto guidance for banks.

Hsu has called for increased caution regarding the crypto contagion to the traditional financial system. The recent crypto turmoil caused investors to lose billions in money, urging lawmakers and regulators to increase scrutiny on crypto-related services.

 *U.S. SEC and Senators’ Strict Stance After the Crypto Crisis* 

SEC Chair Gary Gensler and Banking Committee Chair Sherrod Brown and member Senator Elizabeth Warren have urged for increased regulatory oversight on crypto activities and companies.

SEC Gensler’s approach on crypto policies and forced jurisdiction have been criticized by the crypto community as well as by other regulators and lawmakers. Crypto investors have even signed a petition to make Gensler resign from the position.

Warren and Brown are pressurizing regulators to combat crypto fraud and risks. Elizabeth Warren recently sent a letter to regulators to take action against crypto miners for high energy usage.

6. Why The SEC May No Longer Oversee The Crypto Industry

There is a renewed push for widespread crypto regulation in the United States Congress. Four members of the Senate Agricultural Committee introduced a bill with the intent to make the Commodities and Futures Trading Commission(CFTC) to be the primary regulatory body for the crypto industry. 

The four senators behind the bill are Senator Debbie Stabenow from Michigan, Senator John Boozman from Arkansas, Senator Corey Booker from New Jersey, and Senator John Thune of South Dakota. The bill is bipartisan as Boozman and Thune are members of the republican party, while Stabenow and Booker are Democrats.

This is the third bill this year that aims at removing the Security and Exchanges Commission as the primary oversight agency of the crypto industry.

According to Jake Chervinsky, the head of policy at Blockchain Association, the bill terms crypto exchanges as “digital commodity platforms”. This is in direct contradiction with the verbiage used by SEC chair Gary Gensler, who considers most crypto tokens to be securities. He also recently pushed the crypto exchanges to register with the SEC.

Chervinsky reveals that the bill wants crypto exchanges to register with the CFTC and follow certain rules to protect the consumers from risks and manipulation.

According to Peter Van Valkenburgh, the head of research at CoinCenter, there is bicameral and bipartisan support for crypto regulation that clarifies crypto jurisdiction and can protect the consumers from various risks. 

The recent regulatory actions from the SEC have been criticized by crypto leaders and lawmakers alike. According to Chervinsky, secondary market regulation is a top priority in Washington and a combination of the bills presented in Congress this year could pass as soon as next year.

Kristin Smith, the Executive Director of the Blockchain Association, believes that there is widespread optimism around a possible crypto regulation. She describes the bipartisan nature of the bills and the regulatory holes in the crypto industry to be the factors driving the push.

7. South Korean Banks May Be in Trouble as Regulator Probes Kimchi Premium Bitcoin ‘Irregularities

South Korean banks could find themselves in the firing line after the government, media outlets, and regulators stepped up the scrutiny of the banks' role in enabling kimchi premium traders to make fast money when trading volumes rise.

As previously reported, regulators stepped in last month to warn banks about their failure to stop traders from buying tokens like bitcoin (BTC) overseas via wire transfers – which traders then sought to dump on domestic crypto exchanges for a hefty profit.

When BTC prices have risen in recent years, retail investors’ trading volumes have soared – historically leading to discrepancies of up to 50% between prices on domestic platforms like Upbit and global platforms like Binance.

Some opportunistic traders have sought to take advantage of such price gaps by buying BTC from over-the-counter vendors – primarily individuals based in Mainland China, Hong Kong, and Japan. South Korean authorities, which already impose strict regulations on foreign exchange trading, have equated such trading with money laundering – and have vowed to stamp it out.

Banks have since responded with overseas remittance caps, but concern has since arisen that – historically – some USD 3.4 billion worth of illegal foreign exchanges have been carried out in recent years. And the Financial Supervisory Service (FSS) last week said that all of this money may have passed through domestic banks.

The FSS initially identified what it thinks were “abnormal” foreign exchange transactions at both Woori and Shinhan, with prosecutors also looking at the evidence.

But per Energy Kyungjae, which quoted unnamed banking industry sources, the FSS has been aware of potential issues for over a year – and has previously warned most domestic banks about possible violations. The media outlet added that the regulator had repeated its warnings “several times” in 2021.

In addition to the aforementioned Woori and Shinhan, the regulator reportedly also issued private warnings to Kookmin Bank, KEB Hana Bank, and Nonghyup Bank. The FSS reportedly told all five banks “to be careful about arbitrage trading aimed at the kimchi premium” in 2021.

KEB Hana was fined for violating the terms of the Foreign Exchange Transactions Act this year after an internal audit revealed historical irregularities – possibly related in some cases to crypto – dating back to 2018.

Chosun, meanwhile, reported that the FSS was “expanding its initial investigation to the entire financial sector,” and claimed the regulator had conducted “on-site investigations.” The findings of these probes have been shared with the prosecution service, as well as the National Intelligence Service (NIS), and the Korea Customs Service.

8. BitMEX Co-Founder Fights UK Watchdog Over His Financial Data

BitMEX co-founder Benjamin Delo claims the Information Commissioner’s Office failed to uphold his rights in a case involving fintech Wise

* Delo withdrew legal action against fintech company Wise after it complied with his request to hand over data

* Wise earlier submitted three suspicious activity reports on Delo to a UK crime agency

The co-founder of crypto derivatives exchange BitMEX who was spared prison time will challenge a top UK agency over rights to his own data, which he claims had been withheld.

BitMEX insider Benjamin Delo was granted consent to seek judicial review against the UK’s data watchdog, claiming the agency failed to grant him personal information rights.

Delo’s solicitor, Matt Getz, confirmed to Law360 on Wednesday that the UK High Court approved his client’s request for litigation against the Information Commissioner’s Office (ICO).

The approval reportedly follows Delo’s withdrawal of legal action against London-based fintech firm Wise, formerly called TransferWise, which had been forced to disclose suspicious activity reports tied to his account.

Delo claimed the ICO failed to support his right of access, which enables a data owner to obtain a copy of information that a company may have on them. He sued Wise earlier this year after repeated attempts beginning in 2020 to supply his personal data, saying he had the right to do so under the UK’s Data Protection Act of 2018. 

Wise bowed to his request in June. But Delo still wants to square with the ICO since it “failed to perform its duties and ensure that Wise upheld its obligations.” 

An ICO spokesperson told Blockworks they wouldn’t comment at the moment since the matter is ongoing.

Delo said in a February claim that he had the right to obtain copies of his data from Wise, including three suspicious activity reports, which the company had submitted to the National Crime Agency, according to Law360. 

He also claimed Wise unexpectedly closed his account in November 2020 after he transferred £300,000 (then worth $408,000) from a Hong Kong-based HSBC account to the Wise account. 

Wise is said to have held his cash for 135 days after the account’s closure, which meant Delo couldn’t earn interest on that balance. The move to close Delo’s account came weeks after he drew the attention of US authorities. 

Wise is said to have held his cash for 135 days after the account’s closure, which meant Delo couldn’t earn interest on that balance. The move to close Delo’s account came weeks after he drew the attention of US authorities. 

 *BitMEX co-founder on probation for violating Bank Secrecy Act*

Futures Trading Commission charged Delo, along with co-founder Arthur Hayes and two other high-ranking BitMEX employees, with violating the US Bank Secrecy Act by illegally operating a crypto derivatives platform.

Both pleaded guilty to the charges and agreed to pay a $10 million fine each in February this year, with the Department of Justice saying they wilfully failed to implement Anti-Money Laundering and Know Your Customer programs.

In June, Delo was sentenced to 30 months probation without home confinement, while Hayes was handed two years probation with six months home detention, as well as location monitoring.

BitMEX declined to comment, saying the matter was personal to Delo. The co-founder’s lawyer didn’t return Blockworks’ request for comment by press time.