Texas law enforcement wants Sam Bankman-Fried to attend February hearing: Law Decoded

Welcome to Law Decoded, your weekly overview of all the major developments in the regulatory field.

There was some significant good news for crypto last week, but the prevailing story remains the development of FTX. While the extradition of the failed exchange’s founder Sam Bankman-Fried seemed quite logical from the beginning of the saga, last week the 30-year-old received the first official call: the Texas State Securities Board (SSB) invited the former CEO to attend the hearing about the alleged the sale of unregistered securities on February 2. SSB enforcement chief Joe Rotunda hopes to get a cease and desist order from the judge during the hearing.

But the man himself is in no rush to return to America, even for the congressional invitation. Bankman-Fried has signaled that he is not willing to testify before the US Congress until he is “finished learning and reviewing what happened”.

Meanwhile, the FTX crush continues to cause a ripple effect around the world. In Singapore, Prime Minister Lee Hsien Loong and Deputy Prime Minister Lawrence Wong are set to face grilling questions over their failure to protect retail investors. Since Singaporean state-backed investor Temasek was one of 69 investors to invest in the FTX cryptocurrency exchange’s $420 million funding round in October 2021, opposition MPs have recommended a bipartisan committee to question Temasek about its investment strategies.

In Europe, the president of the European Central Bank, Christine Lagarde, highlighted the FTX failure and stated the necessity of the second package of crypto regulations after the Markets in Crypto-Assets (MiCa) were to come into effect. Her colleagues on the US House Finance Committee will also pay more attention to the FTX case during the special hearing scheduled for December 13. And the Commodity Futures Trading Commission (CFTC) has already held one – answering “How did that happen?” questions its chairman Rostin Behnam predictably called for more power to the commission.

Brazil passes law to legalize crypto as a payment method

And now for the good news! The Chamber of Deputies of Brazil, a federal legislative body, has adopted a regulation legalizing the use of cryptocurrencies as a payment method in the country. Although the document will not make Bitcoin (BTC) legal tender as in El Salvador, it will still include digital currencies and flight-long programs in the definition of payment methods overseen by the country’s central bank.

Apart from designating crypto as a payment method, the law allows for the creation of licenses for crypto exchange platforms and for the custody and handling of crypto by third parties. In addition to this, the law will require the exchanges to make a clear distinction between company and user funds, in order to avoid another incident such as the FTX collapse.

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Italy will impose 26% capital gains tax on crypto profits

Italy plans to tighten regulations on digital currencies in 2023 by expanding its tax laws to include cryptocurrency trading. Included in the 2023 budget are plans to impose a 26% tax on profits greater than 2,000 euros ($2,062) made on cryptocurrency trading. Historically, digital currencies have had lower tax rates because they have been considered “foreign currency”. If the proposed bill is signed into law, taxpayers will have the option to declare the value of their digital assets from January 1 and pay a 14% tax. This is intended to encourage Italians to declare their digital assets on their tax returns.

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The South Korean judge rejects arrest warrants for Do Kwon’s former associates

A judge at the Seoul Southern District Court has reportedly set aside arrest warrants for Terra co-founder Shin Hyun-seong along with three Terra investors and four developers. Judge Hong Jin-Pyo said there was little risk of Shin or the Terra associates destroying evidence related to the case against the crypto firm. Do Kwon, who also faces legal action in South Korea for his role in the firm’s collapse, remains unlikely to return to the country, according to local media.

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