[co-author: Lauren Bass]
New Crypto Products Launch in Payment Cards, Gold and Sandwiches
By Joanna F. Wasick
Coinjar, an Australian cryptocurrency exchange, recently announced its launch of a payment card backed by a major U.S. credit card and financial services business. The card, reportedly the first of its kind in Australia, will allow users to buy, sell and spend cryptocurrency directly from its platform using local dollars. According to CoinJar’s press release, the card supports up to 30 different cryptocurrencies and features a 1 percent conversion rate that makes returns to customers via an in-house reward program.
Kitco, a Canada-based provider of news and data on gold and other precious metals, recently announced that it will issue a gold-backed stablecoin, Kitco Gold. The stablecoin will reportedly be fully backed by physical gold kept in Kitco’s own reserve vaults and will track gold’s real-time market value. A spokesperson from the company says that initial trading will begin in the coming weeks.
Earlier this week, Bakkt Holdings, LLC, the digital asset marketplace behind the Bakkt App, a digital wallet provider, announced a partnership with a major fast-food restaurant featuring toasted submarine sandwiches. The two entities are working together to allow restaurant customers to pay with bitcoin at select locations. The pilot will start in the Denver market, including in the location in the Denver airport.
A national television news station recently reported that a Washington, D.C., couple could not access their 3,000 ETH, now valued at around $8.4 million. The couple maintains that when they bought the cryptocurrency in 2014, they were unable to complete the download of a JSON file that holds an encrypted version of their private key. The couple reportedly contacted the Ethereum Foundation with proof of their purchase and screenshots of the problematic download. The Foundation allegedly promised to help resolve the issue, but, the couple says, it has not yet done so. The story is one of many in which cryptocurrency holders can no longer access their cryptocurrencies because they are unable to access – or remember – their private keys.
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More NFTs Launch in Sports, Fashion, Gaming and Charity Auctions
By Lauren Bass
According to a press release this week, the owner and operator of a major U.S. cryptocurrency exchange has teamed with a boutique production shingle to launch a new non-fungible token (NFT) marketplace. The “large-scale,” “consumer-facing” venture aims to be a “seamless user experience” that will design, curate and sell NFTs for sports, entertainment and lifestyle brands.
According to recent reports, Vegas basketball fans will soon be presented with a unique opportunity to purchase one-of-a-kind “moment-in-arena” NFTs exclusively at stadium kiosks. According to reports, this marks the first time that NFTs will be sold at a physical location.
In other sports news, a celebrated soccer player will reportedly be commemorated with his own authenticated NFT collection. The NFT series will reportedly consist of four unique artworks and will be available exclusively on the Ethernity Chain.
According to recent reports, a luxury British fashion house is the latest designer to embrace NFTs as a new means of brand promotion. The style icon will offer limited-edition product drops via the multiplayer online game Blankos Block Party. The branded NFT collection will be available for purchase exclusively in the game.
To celebrate International Friendship Day, a multinational beverage corporation has reportedly partnered with a Utah-based designer of avatars and digital wearables to offer a special edition NFT via auction. The NFTs will be offered on the Ethereum blockchain, and proceeds from the auction will benefit Special Olympics International.
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SEC Chairman, Kentucky and UK Address Various Aspects of Crypto Industry
By Veronica Reynolds
On August 3, 2021, the chairman of the U.S. Securities and Exchange Commission, Gary Gensler, spoke on the topic of cryptocurrencies at the Aspen Security Forum. The chairman’s speech emphasized the need for increased investor protection in the cryptocurrency ecosystem. The chairman acknowledged that Bitcoin “has been and could continue to be a catalyst for change in the fields of finance and money.” However, he observed that the lack of central intermediaries fosters a financial ecosystem that skirts regulations created to protect public policy goals. He emphasized the Commission’s role in addressing such legal violations and said the Commission “will continue to take [its] authorities as far as they go.” Among other things, the chairman noted that while “[c]ertain rules related to crypto assets are well-settled,” there “are some gaps in this space” that need to be addressed, including the need for congressional authorities to “prevent transactions, products, and platforms from falling between regulatory cracks.”
The Kentucky Department of Financial Institutions is the latest state agency to issue an emergency cease and desist order against Blockfi Inc. and its affiliate entities (Blockfi), instructing the company to refrain from unlawfully soliciting or selling securities in Kentucky. The agency noted that Blockfi has accepted close to $15 billion in customer cryptocurrency deposits in order to fuel its cryptocurrency lending and borrowing services. The agency’s action comes on the heels of other recent actions brought against the company by New Jersey, Alabama, Texas and Vermont.
According to recent reports, the Financial Action Task Force’s so-called “travel rule” for cryptocurrency transactions may be implemented by the U.K’s finance ministry, HM Treasury. The Treasury unveiled the proposed implementation for public comment last week, emphasizing its relevance in protecting against terrorism financing and money laundering. The Treasury stated that it waited to formally propose adoption of the rule “in order to allow compliance solutions to be developed” by cryptocurrency-focused firms.
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Proposed Legislation Expands Crypto Tax Reporting, Senators Seek Amendment
By Nicholas C. Mowbray
The United States Senate introduced legislation this week to advance a portion of the White House’s infrastructure plan. Included in the legislation is a proposal intended to enhance cryptocurrency tax reporting and enforcement and to raise $28 billion of revenue to pay (in part) for the infrastructure plan’s price tag.
As currently drafted, the legislation could have broad and sweeping impacts on the entire cryptocurrency industry by imposing tax information reporting requirements on cryptocurrency transfers conducted by persons acting under an expanded definition of the term “broker.” In its current form, the legislation would expand the definition of “broker” to include “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.” Included in this information reporting would be the name and U.S. tax identifying number of the transferee, the sales price, and the transferee’s tax basis. If enacted in its current form, the proposed legislation would have an effective date of January 1, 2023.
Cryptocurrency groups have expressed concerns that the amended definition of broker is too broad and captures miners, software developers, stakers and other individuals who do not perform functions similar to those of a traditional broker (i.e., effectuating the purchase and sale of a cryptocurrency for a client). To address these concerns, a group of U.S. Senators has introduced a proposed amendment that attempts to limit the information reporting obligations to cryptocurrency exchanges. Specifically, the amendment would exempt from the definition of “broker” (and in turn the information reporting obligations) “any person solely engaged in the business of –
(A) validating distributed ledger transactions,
(B) selling hardware or software for which the sole function is to permit a person to control private keys which are used for accessing digital assets on a distributed ledger, or
(C) developing digital assets or their corresponding protocols for use by other persons, provided that such other persons are not customers of the person developing such assets or protocols.”
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