The first half of this year saw massive rallies in crypto and major regulatory moves in response.
- The Biden administration asks banks / exchanges / blockchain / crypto / defi companies to report crypto transactions over USD 10,000 to the IRS.
- Thailand SEC collapses: As of June 11, 2021, meme tokens (such as Doge), fan tokens, NFTs and exchange tokens can no longer be traded in Thailand.
- The regulation fears a reason for the recent crypto dip. Some fear that stronger regulation will lead to further declines for all cryptocurrencies.
US crypto regulation rears its ugly head
In May we saw the blue sky potential, which crypto has been shown to have clouded with clouds. The storm of regulation is brewing! The cryptocurrency world saw its first hint of regulation when the Biden administration revealed its desire to tax crypto transactions in May. The government’s tax enforcement proposal requires cryptocurrency transfers over $ 10,000 to be reported to the Internal Revenue Service (IRS). The Treasury Department believes this move could double the IRS workforce over the next decade.
Thailand’s SEC regulates and bans crypto
At the same time, the Thai SEC announced its decision: an almost complete shutdown of many digital assets. The Thai SEC effectively suspended crypto trading in their country on Friday, June 11, 2021, citing a variety of regulatory concerns.
The Thai SEC has banned:
- Meme tokens: According to the Thai SEC, they have no “clear target or underlying substance”. So they decided against coins like DOGE.
- Fan Tokens: Tokens based on the fame of influencers
- NFTs (Non-Fungible Tokens): Digital creations that derive ownership of an object or a specific right. NFTs are non-interchangeable, unique and cannot be exchanged for digital tokens of the same category.
- All digital tokens used for blockchain transactions and issued by digital asset exchanges or “related persons”.
The international law firm Pugnatorius Ltd. based in Thailand pointed out that many crypto investors in Thailand see the crypto world as a kind of tax haven and described it as “self-deception”:
“Coinowner’s self-deception: Even these days, it is a common tax planning strategy for crypto owners to base unresolved tax obligations on the hope that this will not be taken up by Thailand’s tax authorities selling offshore in a tax-free area. The strategy of hope and error only works for a certain period of time. “- Pugnatorius Research, Seven Statements on Bitcoin Taxation in Thailand (January 22, 2021)
Regulators are scared of crypto for good reason
Fears of regulating crypto aren’t surprising. Especially in the face of stories like the arrest of a man in Thailand with more than $ 800 million in BTC. Bitcoin has gained insane ground since its inception, from around 1,000 transactions per month when it was released to a global trade value that dwarfs the GDP of many countries. Now over 10 million transactions are made at BTC every month.
The Thai SEC is doing what’s right for their nation as the cost of CV19 is staggering for a tourism-dependent nation. Now a nation that attracts many foreigners to work and live in will need all the help it can get. It is clear that the Thai government saw a way to get the country back on its feet.
The bottom line:
What does this mean for you as a crypto investor? It’s pretty obvious: if you’re interested in blockchain, watch your lawmakers very closely! Investors should keep up to date with the latest SEC filings, board meetings, and press releases from their country. Ultimately, investors can practice two things to protect themselves during times of extreme volatility:
What can you do? Be patient and follow the rules.
Selected image: © Palinchak Megapixl