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The IRS Is Hosting A Tax Summit For Crypto Firms In March: The IRS is reportedly hosting a summit in a bid to open up dialogue on tax-related issues around cryptocurrencies.

The agency has invited cryptocurrency companies and advocates to the summit, scheduled to take place on March 3 at the IRS’ Washington D.C. headquarter, according to reports from Bloomberg Tax and CoinDesk. A representative for the agency confirmed the event when reached after publication.

The summit will feature four 90-minute panels touching on technology updates, taxation issues facing cryptocurrency exchanges, tax return preparations, and regulatory compliance.

“[Panelists] will share their views and engage with the audience, which will include IRS personnel from across the spectrum of tax administration, and individuals from other bureaus or offices within the Department of Treasury,” Bloomberg reported.

The summit comes amid the IRS’s toughened stance on cryptocurrency tax evasion. In 2019, the agency sent out thousands of letters to cryptocurrency holders who allegedly failed to report their earnings.

This year’s 1040 form also includes, for the first time, a question on taxpayers’ cryptocurrency activities.

The SEC Would Still Be Watching Under Peirce’s Safe Harbor Proposal — And They’d Know Where To Look:

· EC Commissioner Hester Peirce introduced a proposed rule that would give token projects safe harbor for three years, allowing them time to sufficiently decentralize their networks

· The application for safe harbor would require a variety of disclosures, putting the details of many projects on the SEC’s radar

· Though it’s only in proposal form, Peirce’s announcement is already making waves in the ecosystem.

SEC Urges Listed Firms To Factor Coronavirus Risks In Their Financial Disclosures: The U.S. Securities and Exchange Commission has urged listed companies in the country to factor coronavirus risks in their financial reporting disclosures.

The SEC said last Wednesday that companies may have “significant” operations in China and other jurisdictions that may be affected by the coronavirus or may have their suppliers, distributors and/or customers in those regions.

While actual effects may be difficult to assess, the SEC said companies should work with their auditors to ensure that their financial reporting and auditing processes are “as robust as practicable in light of the circumstances in meeting the applicable requirements.”

Last month, SEC Chairman Jay Clayton said he had directed staff to start monitoring companies’ disclosures related to the “current and potential effects” of the coronavirus on their businesses.

“This is an uncertain issue where actual effects will depend on many factors beyond the control and knowledge of issuers. However, how issuers plan for that uncertainty and how they choose to respond to events as they unfold can nevertheless be material to an investment decision,” Clayton said at the time.

Over 2,000 people have died from the coronavirus outbreak as of Feb. 20, according to Worldometer, while over 75,000 cases have been confirmed in 30 countries and territories.

US Treasury Could Have More Oversight Over Crypto If Trump’s Budget Proposal Goes Through: The U.S. Department of the Treasury could have more supervision powers over the crypto space if President Donald Trump’s budget proposal for the fiscal year 2021 goes through.

Released last Monday, the $4.8 trillion budget, seeks to move the U.S. Secret Service back to the Treasury to fight crypto-related crimes such as money laundering and terrorist financing. The Secret Service, established in 1865 within the Treasury to protect presidents and combat currency counterfeiting, was transferred to the Department of Homeland Security in 2003.

“Technological advancements in recent decades, such as cryptocurrencies and the increasing interconnectedness of the international financial marketplace, have resulted in more complex criminal organizations and revealed stronger links between financial and electronic crimes and the financing of terrorists and rogue state actors. The Budget proposes legislation to return the U.S. Secret Service to Treasury to create new efficiencies in the investigation of these crimes and prepare the Nation to face the threats of tomorrow,” the proposal reads.

The proposal, however, is reportedly unlikely to get through Congress — but reveals the Trump administration’s policy priorities.

The budget “prioritizes Treasury’s role in fostering a strong economy in the United States, ensuring financial stability abroad, strengthening national security, and effectively managing the taxpayer resources,” said Treasury Secretary Steven Mnuchin in a separate statement published last Monday.

Mnuchin has been vocal about rooting out bad actors in the crypto space. He once said: “We don’t want bad actors using cryptocurrency. That’s our number one issue,” adding that it is a “national security issue.”

He also said that “very, very strong” regulations are needed to ensure bitcoin and cryptocurrencies don’t become like anonymous Swiss bank accounts, “which were obviously a risk to the financial system.”

U.S. Agencies Seek Millions In New Funding To Bolster Crypto Efforts, Budget Documents Show: Federal agencies within the U.S. Department of Justice and the Treasury Department are seeking millions of dollars in additional funding for FY 2021 to support their cryptocurrency oversight and enforcement efforts, a review of public budget documents shows.

The Trump administration unveiled its $4.8 trillion budget plan last Monday. As CoinDesk reported at the time, the budget summary notably focused on a plan to move the U.S. Secret Service from the Department of Homeland Security to the Treasury Department, its original home.

“Technological advancements in recent decades, such as cryptocurrencies and the increasing interconnectedness of the international financial marketplace, have resulted in more complex criminal organizations and revealed stronger links between financial and electronic crimes and the financing of terrorists and rogue state actors,” the summary document states.

A closer look reveals that major agencies within Treasury are seeking Congressional funds to beef up their existing crypto efforts. FY 2021 begins on October 1, 2020.

Unsurprisingly, among those agencies in the Internal Revenue Service (IRS). According to its FY 2021 documentation, wants $40.54 million to “Expand Cyber and Virtual Currency Compliance Efforts.”

“This additional funding would support the hiring of 108 special agents to conduct more criminal investigations related to cyber and virtual currency,” the agency wrote, explaining:

“As a result, about 450 additional criminal investigations are projected to be completed from FY 2023 — FY 2025 once the new hires reach full potential. Additionally, CI estimates that as a result of the additional special agents, CI will identify $197.3 million annually in tax revenues either not reported to the IRS or fraudulently refunded by the IRS.”

The Office of Foreign Assets Control (OFAC), according to documentation for the Office of Terrorism and Financial Intelligence (under which it operates), is seeking four full-time employees and an additional $812,000 to hire “virtual currency investigators.”

As the budget document outlines:

“Presently, OFAC has a single investigator focused on the illicit use of virtual currency, and this investigator is often pulled away from purely investigative duties in order to share virtual currency expertise across [Terrorism and Financial Intelligence], since this area is of high concern but also an uncommon area of technical competency. Meanwhile, investigators across most sanctions programs are reporting increasing exposure to the use of virtual currencies by the targets of their investigations. Additional virtual currency investigators will allow investigations involving cryptocurrency across all of OFAC’s sanctions programs to be able to exploit this investigative arena.”

The Financial Crimes Enforcement Network (FinCEN), according to budget documents, is seeking $819,000 and three full-time employees to support “Building Out FinCEN’s Virtual Currency and Cyber Threat Mitigation Program.”

As FinCEN explained:

“These funds will allow for international capacity building to ensure that accessibility of critical information exists for investigations that include an international component. The utilization of software tools will allow FinCEN to double the number of virtual currencies analyses, corroborate findings, and increase big data analytics capability, allowing for automated analytics and visualization of financial and cyber data. The program enhancement strengthens direct support for law enforcement cases to 130 cases per year, the development of 37 strategic intelligence products, and the provision of 50 training sessions per year.”

U.S. Treasury Secretary Steven Mnuchin told a U.S. Senate committee last Wednesday that FinCEN is gearing up to release new requirements related to cryptocurrencies, although what shape such a move will take remains to be seen.

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New Jersey Lawmaker Files Bill To Require Licenses For Crypto Companies: A lawmaker New Jersey has introduced a new bill that, if passed and signed into law, would mandate that cryptocurrency businesses must obtain a license to operate in the state.

The new bill — the “Digital Asset and Blockchain Technology Act” — aims to strengthen consumer protection laws in the cryptocurrency space, according to an official announcement. The measure was introduced on Feb. 20, according to data published on LegiScan.

The legislation states that such firms would have to obtain approval from the New Jersey Department of Banking and Insurance or another state that has agreements with the New Jersey government.

To apply for the license, firms would have to disclose their legal names, their fictitious or trade names, their licensing and legal history, as well as their anti-money laundering and anti-terrorist financing policies.

Since the bill aims to shore up consumer protection, crypto companies would also have to release the terms and conditions for their consumer accounts, including a schedule of fees, their compliance status with the Federal Deposit Insurance Cooperation, and information on potential market risks.

“Throughout New Jersey, there are ATMs that dispense Bitcoins. People see and hear about it in their day to day lives, but most are not quite sure what it is,” Assemblywoman Yvonne Lopez, the bill’s prime sponsor, said in a statement. “We must take steps to protect consumers looking to invest in cryptocurrency, while also allowing the sector to continue to develop and expand in New Jersey.”

Crypto-Friendly Presidential Candidate Andrew Yang Considering a Mayoral Run?: “See you back in New York,” Andrew Yang said as he ended his campaign for US president.

Cryptocurrency holders saw an ally in 2020 presidential hopeful Andrew Yang, so the news that he was suspending his campaign on Feb. 11 came as a major disappointment. As one of the outspoken candidates on blockchain and crypto, Yang outlined his plans for the cryptocurrency industry and discussed implementing blockchain-based mobile voting for the upcoming election. One of the political action committees (PAC) supporting Yang even allowed donations in Bitcoin.

Yang’s progressive ideas when it came to universal basic income drove his campaign out of obscurity and into the national spotlight in 2019. Yet he was unable to match the support of candidates like Senators Elizabeth Warren and Bernie Sanders in the Iowa caucus and New Hampshire primary to continue his presidential run. Despite these setbacks, the entrepreneur alluded to getting involved in local elections upon his return to New York City:

“I would certainly not rule out running for office again.”

Michael Bloomberg Surges in US Presidential Race, Proposes Bitcoin and Cryptocurrency Guardrails, Centralized Database for Financial Transactions: Michael Bloomberg’s 2020 US presidential candidacy is looking up. Way up. The former New York mayor just qualified for his first Democratic presidential debate. With 19% support nationally, according to the latest NPR/PBS NewsHour/Marist poll, Bloomberg trails only Bernie Sanders who has garnered 31% support.

The billionaire media mogul and majority owner of Bloomberg L.P., a late entrant to the US presidential race, will join the debate stage on Wednesday, February 19 in Las Vegas, Nevada, putting his newly released financial reform plan front and center.

Bloomberg’s plan calls for a centralized record of all financial transactions in an effort to restore “protections and safeguards” that he says were put into place after the 2008 financial crisis and then stripped away by President Donald Trump.

Bloomberg says he can undo the damage through centralization and a clear regulatory framework for Bitcoin (BTC) and cryptocurrency — the new asset class designed to resist centralization.

According to Bloomberg’s plan,

“Mike will improve America’s ability to anticipate and prevent future crises by restoring funding to the Office of Financial Research, requiring large financial institutions to monitor their risk exposure, and creating a centralized record of all transactions in the markets.”

The plan focuses heavily on consumer protections and targets fairness in payday lending, auto lending, credit reporting, access to credit, banking services and financial opportunities.

Despite centralization running counter to the ethos of decentralized cryptocurrencies such as Bitcoin and Ethereum, Bloomberg says he’ll support fintech innovation by establishing a safe environment for entrepreneurs and a regulatory framework for cryptocurrencies.

“Finally, Mike will promote healthy competition in financial services by creating a ‘regulatory sandbox’ where startups can test concepts, and by providing a clear regulatory framework for cryptocurrencies.”

While leaders in the crypto community are attempting to tackle poverty by opening up financial services for the world’s underserved and by removing intermediaries, reducing high fees and using technology and automated smart contracts to streamline business processes, Bloomberg’s approach is bureaucratic. He’ll impose a new tax.

According to his plan,

“Mike will also introduce a tax of 0.1% on all financial transactions to raise revenue needed to address wealth inequality, and support other measures — such as a speed limit on trading — to curb predatory behavior and reduce the risk of destabilizing ‘flash crashes.’”

You can check out Bloomberg’s full financial reform plan here.

Blockchain Startup Enigma Settles With SEC Over Its $45 Million ICO: Blockchain startup Enigma has reached a settlement with the U.S. Securities and Exchange Commission over the initial coin offering it conducted in 2017.

The startup, based in the U.S. and Israel, raised about $45 million during an initial coin offering of its ENG Tokens in the summer and fall of 2017, according to a statement released last Wednesday by the SEC.

The goal of the fundraising, Enigma claimed at the time, was to build a digital asset trade-testing platform and a marketplace for data.

However, regulators at the SEC ultimately determined that the ENG token should be classified as a security and went on to allege that Enigma conducted an unregistered offering of securities.

Enigma “consented to the order without admitting or denying its findings,” the statement said. Enigma also accepted a $500,000 penalty and agreed to a claims process that lets investors who participated in the ICO reclaim their funds. Moreover, Enigma will register its tokens as securities and will periodically report to the SEC.

“All investors are entitled to receive certain information from issuers in connection with a securities offering, whether it involves more traditional assets or novel ones,” said John T. Dugan, Associate Director for Enforcement in the SEC’s Boston Regional Office. “The remedies in today’s order provide ICO investors with an opportunity to obtain compensation and provide investors with the information to which they are entitled as they make investment decisions.”

Enigma further announced Wednesday that its mainnet has been launched, with more than 20 validators currently operating on the network.

“This settlement, which is the culmination of an extended series of discussions with the SEC, clears the way for our development team to return its full attention and energy to our original and continued vision: building groundbreaking privacy solutions that improve the adoption and usability of decentralized technologies, for the benefit of all,” Enigma said in a statement. “With the settlement behind us, we can again push forward and meaningfully advance the Enigma protocol — as evidenced by today’s news of the successful launch of the first Enigma mainnet.”

U.S. Government Charges U.S. Businessman For Allegedly Defrauding Physicians Through Crypto Investment Scheme: The U.S. Securities and Exchange Commission said last Tuesday that it has filed charges against an Ohio-based businessman for allegedly defrauding dozens of investors through a cryptocurrency investment scheme.

The U.S. securities regulator said in a statement that “Michael W. Ackerman, along with two business partners, raised at least $33 million by claiming to investors that he had developed a proprietary algorithm that allowed him to generate extraordinary profits while trading in cryptocurrencies.” Ackerman was formally accused of antifraud violations of U.S. securities law, according to the statement.

The Commodity Futures Trading Commission and the U.S. Attorney’s Office for the Southern District of New York also announced charges against Ackerman, according to a statement. Ackerman was arrested, per the statement.

Notably, the alleged scheme targeted “physicians in particular [who] made investments in two entities, Q3 Trading Club and Q3 I LP, when they were introduced to the digital currency investment opportunity by one of the business partners who also is a physician.”

All told, according to the SEC, “approximately 150 investors” were allegedly targeted.

“As alleged in our complaint, Ackerman lured investors, many in the medical profession, into falsely believing that he generated extraordinary profits from his algorithmic trading strategy,” Eric I. Bustillo, the SEC’s Miami Regional Office director, said in a statement. “Ackerman exploited popular interest in digital assets as a means to obtain millions of dollars for his personal use.”

According to the official complaint, the SEC is seeking disgorgement of gains as well as civil penalties against Ackerman.

$1,700,000,000 in Bitcoin Profits Squandered by US Government: Over the past six years, the US government lost approximately $1.7 billion by selling seized Bitcoin that was linked to illegal activities, according to data from the US Marshals Bitcoin Auction real-time tracker.

The tracker, created by the chief technology officer at crypto startup Casa, Jameson Lopp, calculates the amount of money lost each time the United States Marshals Service rushed to auction off Bitcoin that was confiscated during criminal investigations.

It shows that from June 2014 to January 2020, the USMS sold 185,230 Bitcoin for a profit of $151 million. Its most recent auction placed

Source: Jameson Lopp/GitHub

That same amount of Bitcoin is now worth $1.9 billion, which means the US gave up gains of $1.7 billion by selling early.

The seized Bitcoin were sold at an average of $818 apiece. The current value of the cryptocurrency now hovers at $10,000.