News Updates February 18, 2022

1. Slovenian Finance Ministry Unveils Draft Bill To Tax Crypto Trading

In another sign of intensifying work on crypto-related legislation among European countries, the Slovenian Ministry of Finance has released a draft bill that is to introduce a tax on cryptoasset trading. As a next step, the government could submit the draft bill to the Slovenian parliament for further legislative work.

In the draft legislation’s financial impact assessment, the ministry quotes data obtained from the country’s tax agency, the Financial administration of the Republic of Slovenia (FURS), according to which, over the past few years, Slovenian taxpayers have paid an average of EUR 150m (USD 170.3m) in income tax on capital gains annually.

“Data available online shows that the share of the market capitalization of virtual currencies, compared to the market capitalization of companies listed on world stock exchanges, is 1-2%,” the ministry says.

Thus, we estimate that the revenues of the state budget from this title will amount to EUR 100,000 [USD 113,600] to EUR 500,000 [USD 567,870] per year in the first few years.” 

Under the draft bill, taxes would not be paid on crypto used to purchase goods, services, or other assets worth up to EUR 15,000 (USD 17,000).

Meanwhile, the proposed measure has secured the backing of the Slovenian Chamber of Commerce and Industry (GZS) which declared its support for the proposed fiscal measures. The GZS said in a statement that, by generating additional revenue for the state budget, the Finance Ministry could reduce the tax burden on net wages.

“At the Chamber of Commerce and Industry, we support the bill. We believe that additional revenues of the state budget from this title (EUR 100,000 to 500,000 per year, according to statistical estimates) can contribute to the planned tax (income tax) relief of net wages in … Slovenia for which we have been lobbying for many years,” said Aleš Cantarutti, General Director of the GZS.

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2. Ukraine Passes Vote on Bill to Legalize Bitcoin

The Virtual Assets Bill, which Ukraine’s president vetoed in October, has now passed a parliamentary vote. 

The Ukrainian parliament has voted in favor of a bill granting legal status to Bitcoin and other cryptocurrencies. 

Ukraine Makes Crypto Legal:

Ukraine is the latest country to adopt a legal framework for crypto assets.

The Ukrainian parliament voted in favor of a Virtual Assets Bill Thursday that grants legal status to all cryptocurrencies and virtual assets. The bill received 300 votes in its favor and only two votes against it. 

The bill establishes a basic regulatory framework for all virtual assets in Ukraine. It refers to cryptocurrencies such as Bitcoin and Ethereum under the term “virtual asset,” defined as any asset that cannot already be legally used as a payment instrument or traded for other assets, products, or services. 

In addition to laying the legal groundwork for incorporating crypto assets into Ukraine’s financial and regulatory systems, the bill also confirms citizens’ rights to hold and use cryptocurrencies and defines the rights and duties of all cryptocurrency market participants. 

While the same Virtual Assets Bill previously cleared the Ukrainian parliament in October, it was vetoed by the country’s president, Volodymyr Zelensky. The bill has since been amended to ensure it contained the legal mechanisms needed for the implementation and met constitutional

According to Mikhail Fedorov, the head of Ukraine’s Ministry of Digital Development, the new bill will allow Ukraine to start a legal market for virtual assets. The bill stipulates that Ukraine’s National Securities Commission will act as the main regulator for virtual assets and any future virtual asset market. 

Disclosure: At the time of writing this piece, the author owned ETH and several other cryptocurrencies.

3. India’s crypto tax provides little legal clarity for traders and exchanges

The Indian government’s recent announcement of a 30% tax on crypto returns has sparked an industrywide discussion on its feasibility.

Earlier in February, Indian Finance Minister Nirmala Sitharaman announced a tax proposal that would bring the relatively unregulated digital asset space under the purview of tax authorities.

The proposal includes a 30% income tax on crypto returns and a 1% tax deducted at source (TDS) by crypto exchanges on transactions above 10,000 Indian rupees ($133).

The announcement came during the parliamentary budget session for 2022, and the government has already set April 1 as a deadline for crypto exchanges to comply with the new tax regulations.

The introduction of the crypto tax was widely misreported as a form of legal recognition of cryptocurrencies in India — a notion that was debunked by the head of the country’s Central Board of Direct Taxes. 

Sitharaman repeated a similar stance to Parliament a few days later, claiming that the government will only tax the profits from digital assets and in no way give them legal recognition. The legality of the crypto market will be decided later after appropriate legislation is introduced in Parliament.

*  30% crypto tax would do more harm than good

The 30% crypto tax bracket is the highest in the country and nearly double the corporate tax rate of 16%. The announcement saw a mixed reaction from the crypto community in India, with exchanges calling it a welcome step toward some level of recognition of the unregulated crypto market, while many crypto traders called it regressive.

Representatives of Indian crypto exchanges met senior policymakers from the Ministry of Finance to appeal to the government, asking it to reconsider the proposed tax rules.

According to The Economic Times, industry leaders tried to explain that a 1% TDS could deter small traders and also lead to assets shifting to foreign exchanges. The representatives also outlined how difficult it would be to collect TDS on transactions from foreign exchanges with no data to track. The meeting’s discussions brought forward various challenges in implementing the tax without clear regulations.

Despite the government insisting that taxation does not constitute the legal recognition of cryptocurrencies, Sumit Gupta, co-founder and CEO of Indian crypto exchange CoinDCX, told Cointelegraph that the proposal was a landmark move that brings greater legitimacy to digital asset markets. Regarding the high tax bracket and its inherent complexities, Gupta said:

* Crypto taxes could deter foreign investment

The Indian crypto ecosystem has managed to thrive despite uncertainty over crypto regulations during the past three years. Despite the fact that the Indian government has yet to finalize a draft crypto bill, foreign venture capital firms and crypto exchanges have been eyeing the vast Indian market and its potential to become one of the behemoths in the ecosystem.

Several Indian crypto exchanges have become unicorns (worth $1 billion or more) over the past couple of years, attracting investment from some of the biggest names on Wall Street. However, the recent complicated tax policies could prove to be a damper on their plans. Sogani explained:

India’s crypto taxation rules have become a paradox of sorts at this point. On the one hand, bringing crypto under a tax regime gives it some level of recognition; but on the other, the government claims that the legal recognition of crypto can only be determined after the proper laws are introduced. This heavy tax on crypto holdings has only added more complexities for India’s crypto entrepreneurs and traders.

4. UAE to Issue Crypto Licenses in Bid to Become Industry Hub: Report

The Middle Eastern country is gearing up to become a global crypto hub.

The United Arab Emirates is preparing to issue federal licenses for virtual assets service providers by the end of this quarter in a bid to attract crypto companies to the country, Bloomberg reported on Thursday, citing a government official.

* The Securities and Commodities Authority (SCA) is in the final stage of setting up a framework allowing VASPs to set up shop in the country, the official said.

* Having considered the approaches of the U.S., U.K. and Singapore, the UAE will take a hybrid approach: The SCA and central bank will be responsible for regulation, with regional financial centers determining their day-to-day procedures on licenses, according to Bloomberg.

* The government also wants to create a favorable environment for crypto mining, the report said.

* The government of Dubai, one of the seven constituent emirates, said in December it will create a favorable regulated zone for crypto service providers in the Dubai World Trade Center, a skyscraper in the city. The next day, Binance, the world's largest crypto exchange, signed a cooperation agreement with the trade center.

* Abu Dhabi’s International Financial Center, a finance hub and free-trade zone, issued its first crypto exchange license, to Matrix, in May 2020. In November 2021, three exchanges headquartered at the center were fully operational while another three were in the process of launching, the finance hub’s regulation chief told local news site The National.

• The Dubai Multi Commodities Center, the largest free-trade zone in the UAE set up a regulatory framework for crypto firms in March 2021. It has already licensed 22 companies, Bloomberg reported.

5. South Korean university to issue NFTs to all 2,830 graduates

South Korea’s Hoseo University will issue non-fungible token (NFT) degrees and certificates to all 2,830 graduates of its 2021 batch at its graduation ceremony on Friday.

* The university hopes the pivot from a paper-based degree to NFTs will improve access to administrative services and prevent forgery or alteration of the degree.

* A wide range of industries and entities in South Korea have started to adopt NFTs, with the country’s leading conglomerates Samsung, SK and LG including NFTs in their newest line of goods and services.

* Earlier this week, South Korea’s Samsung-backed Sungkyunkwan University issued NFT certificates to three students in its graduation ceremony.

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6. Bitcoin, Ethereum, XRP, and Chainlink Daily Price Analyses – 17 February Roundup

* The global market cap continues to recede as it loses 6.53% in 24 hours.

* Bitcoin suffers a huge change in its value while losing 7.32% in 24 hours.

* Ethereum is next to bitcoin in losses as it sheds 7.32% in 24 hours.

* XRP and Chainlink continue to be bearish, losing 6.16% and 8.55%, respectively.

The market continues its fluctuations as it has suffered a huge blow with a loss of 6.53%. The market is in losses due to opportunities for investors in other fields like oil and other commodities because of growing benefits. The prime example is that of oil, for which there is a rise in demand and consequently in the prices. It arose as the result of Russia-Ukraine tensions and has continued since then.   

There are chances that the crypto industry and other investments will fall in the coming days. Fear of the Russian invasion of Ukraine is creating problems for the world economy. While on the other side, there is a change seen in Canada for crypto. It has sanctioned more than 34 crypto wallets because of their alleged links with truckers’ Freedom Convoy. Thus, these sanctions have also affected the total value of the market.

Here is a brief overview of the market situation and the condition of leading coins like Bitcoin, Ethereum, and others.   

1) BTC takes a huge blow

The bitcoin price is going through an uncertain period due to the Ukraine tension. Investors fear losses if the tensions turn to war. For this reason, they have reduced their investments in futures, crypto, and other commodities. The result is a loss in the value of Bitcoin, which is unusual compared to the previous days’ trend. It has also affected bitcoin dominance which has fallen below 42%.  

The 24-hour data for Bitcoin shows a loss of 7.32%, which has taken its price to the $40,810.23 range. The depreciation of more than $3K proved alarming for investors, which has affected the total market value for bitcoin. Compared to this, the weekly performance of bitcoin shows a loss of 5.13%. The current market cap for bitcoin is estimated to be $773,302,060,163.

The 24-hour trading volume for bitcoin is estimated to be $27,466,154,417.

2) Ethereum reverses all of a sudden

Ethereum has remained a close partner in sufferings with bitcoin. Both have shed value due to growing fears of Ukraine’s Russian invasion. The change in the market has affected Ethereum, which has lost 7.32% in 24 hours. At the same time, the losses for seven days amount to 4.60%.  

The current price for Ethereum is $2,911.56. In comparison, the market cap for Ethereum is estimated to be $347,924,443,098. Analysis of the weekly graph for Ethereum shows that it had gained a significant amount a day back, and then all of a sudden, it shed it.

The 24-hour trading volume of Ethereum is estimated to be $18,550,854,068.

3) XRP sees no difference

XRP has continued bearish for the past few days. Though it continued fluctuating, the recent change has made it completely bearish. The 24-hour data for XRP shows a loss of 6.16%, which has taken its price to $0.7874.

If we take a peek at the seven-day data, it shows a loss of 3.86%. The current market cap of this currency is estimated to be $37,730,804,223. In contrast, the 24-hour trading volume of this coin shows a value of $3,028,802,001.  

4) LINK shedding indifferently

Chainlink has changed course after gains. The last 24 hours proved difficult for it as it shed 8.56%. In comparison, the seven-day data shows that depreciation is about 8.19%. The current price for Chainlink is about $15.84, while its current ranking is 22nd.  

The current market cap for Chainlink is about $7,396,029,754. In comparison, the 24-hour trading volume is estimated to be $750,545,885.

5) Final Thoughts

The market has again changed course due to the ongoing global political situation. The impacts of these changes on the crypto market are evident because of its losses. Due to the ongoing situation, the global crypto market’s value has been reduced to $1.86T. If the situation worsens, there are chances that it might recede further. The impacts on stocks, oil, futures, and other areas are evident as there is a trend of bearishness.