Bitcoin Network Mining Difficulty Continues Downward Trend Amid Heat Wave
By Jordan R. Silversmith
A recent analysis of Bitcoin mining activity has shown that Bitcoin Network mining difficulty dropped by 5 percent recently, continuing a three-month downward trend since reaching its all-time high in May 2022. This is the third consecutive downward adjustment of mining difficulty and the first time it has happened since last July, when China banned Bitcoin mining. According to reports, this time the drop in difficulty is a result of U.S. miners turning off their machines in the past two weeks due to soaring electricity prices, as record-breaking heatwaves have lingered. The rising costs of mining have reportedly had significant effects on miners in Texas, which is experiencing hotter-than-usual temperatures that have caused some miners to cease operations in order to accommodate the state’s energy grid load. Although extraordinary electricity costs have led some industrial-scale miners in Texas and beyond to curtail their mining activity, some miners may benefit. Analysts believe the lower difficulty is good news for small-scale Bitcoin miners, because reduced difficulty enables miners to confirm transactions using fewer resources, which allows small-scale miners to compete with larger miners for mining rewards.
For more information, please refer to the following links:
CFTC Chair Addresses Crypto; Proposed Bill Would Simplify Crypto Tax Rules
By Keith R. Murphy
The U.S. Commodity Futures Trading Commission (CFTC) recently published a keynote address by Chairman Rostin Behnam discussing the future of cryptocurrency regulation. Among other observations, Chairman Behnam noted that despite information suggesting that one in every five American adults has invested in or otherwise used cryptocurrency, the market has developed without clearly demarcated regulatory bounds, adding that the recent “crypto winter” has reinvigorated the call for a regulatory approach. Behnam stated that the U.S. digital asset industry does not fall within a single comprehensive regulatory scheme, and later suggested that “as with any trading market, the digital asset market would benefit from uniform imposition of requirements focused on ensuring certain core principles, including market integrity, customer protection, and market stability.” Among other statistics, he shared that the CFTC has pursued more than 50 enforcement actions since 2014, including for digital asset-related misconduct, retail fraud involving digital assets, the illegal offering of off-exchange trading in digital assets, and making untrue or misleading statements and omissions. According to Federal Trade Commission information Behnam shared, since 2021 more than 46,000 people have reportedly lost more than $1 billion in cryptocurrency to scams, and top cryptocurrencies used to pay scammers include bitcoin, tether and ether. Behnam pledged that the CFTC would continue using its enforcement authority to protect consumers in the digital asset commodity space from fraud and manipulation.
In another recent development, this week two senators proposed a bipartisan bill that would simplify the application of tax rules to transactions made with digital currencies. According to a press release, under the proposed Virtual Currency Tax Fairness Act, small personal cryptocurrency transactions under $50 would be exempted from capital gains taxation. Under current law, a taxable event occurs every time a digital asset is used. The proposed bill, which received positive reactions from the cryptocurrency industry, reportedly includes an aggregation rule that identifies related sales and exchanges as a single transaction in an effort to prevent potential tax evasion.
For more information, please refer to the following links:
Congress Members Criticize SEC Bulletin on Crypto Accounting Treatment
By Christina O. Gotsis
In late July, four members of Congress sent a letter to the U.S. Securities and Exchange Commission (SEC) requesting it retract a bulletin that advises on the accounting treatment of crypto assets. The SEC bulletin advises that public companies, as well as private companies combining with special purpose acquisition companies, report crypto assets as liabilities and provide additional disclosures regarding the value of those assets. This represents a departure from the practice of holding custodied assets in separate accounts outside the balance sheet. The congressmen warned that the change would make the custody of such assets by banks “economically infeasible” and claimed that the SEC failed to follow “proper process,” such as providing a public comment period.
While SEC Commissioner Hester Peirce called the bulletin a “scattershot and inefficient” attempt to regulate crypto, SEC Chairman Gary Gensler argued that the measure will help protect investors amid a downturn in digital asset markets. Gensler defended the bulletin, SEC Staff Accounting Bulletin No. 121, advising that the bulletin follows the same process as the 120 bulletins before it in its mission to protect investors. Gensler reportedly characterized the bulletin as “advice” for companies seeking accounting guidance for crypto assets. The bulletin itself also notes that it is “interpretive guidance for entities to consider” and does not bear the agency’s “official approval.” Gensler reportedly noted that a bank’s bankruptcy puts customers’ digital assets at risk and that these assets “aren’t well enough developed” and are “sufficiently different” from traditional assets such as stocks or bonds.
For more information, please refer to the following links:
DOJ, SEC and OFAC Continue Cryptocurrency Enforcement Actions
By Robert A. Musiala Jr.
This week, the U.S. Department of Justice (DOJ) published a press release announcing that Michael Stollery, “[t]he CEO of Titanium Blockchain Infrastructure Services Inc. (TBIS)[,] pleaded guilty … for his role in a cryptocurrency fraud scheme involving TBIS’s initial coin offering (ICO) that raised approximately $21 million from investors in the United States and overseas.” According to the press release, Stollery admitted that he made a series of false and misleading statements to the purchasers of tokens in the TBIS ICO and commingled the ICO investors’ funds with his personal funds, using a portion of the proceeds for personal expenses. Stollery pleaded guilty to one count of securities fraud and faces up to 20 years in prison.
According to reports this week, two major U.S. cryptocurrency exchanges may be under investigation by government agencies. One report noted that, according to sources, a major U.S. exchange is under investigation by the U.S. Securities and Exchange Commission (SEC) related to certain cryptocurrency tokens listed on the exchange. Another report provides details on a reported investigation of another major U.S. cryptocurrency exchange by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC). According to reports, the OFAC investigation relates to alleged sanctions violations involving exchange customers in Iran, Syria and Cuba.
In a final development, blockchain analytics firm Chainalysis has published The Chainalysis 2022 State of Cryptocurrency Investigations Survey. The survey polled a population of public sector employees on topics related to the successes and challenges of cryptocurrencies. Among other things, the survey respondents indicated the following sentiments: (1) cryptocurrency will advance the financial system in a positive way; (2) cryptocurrency is prevalent in a variety of crime types, including narcotics, fraud, theft and cybercrime; (3) accurate data, transaction visualization and training are critical for effective use of blockchain analytics tools; and (4) 74 percent indicated their government agency was currently not well-equipped to investigate cryptocurrency-related crime.
For more information, please refer to the following links:
Reports Show Hackers Turning to Cryptojacking and DeFi to Siphon Crypto
By Lauren Bass
According to a recent report issued by cybersecurity firm SonicWall, global incidents of cryptojacking hit record highs earlier this year. Cryptojacking refers to a cyberattack in which hackers implant malware on a computer system and then surreptitiously commandeer that system to mine cryptocurrency for the benefit of the hackers. Overall incidents were up 30 percent, with the retail sector suffering from a 63 percent increase and the financial sector witnessing a 269 percent increase in attacks year-to-date. The report suggests that (1) the decline in ransomware attacks, (2) system vulnerability caused by Log4j and (3) the ability of cryptojackers to operate under the radar all contributed to the cybercrime’s rise in popularity.
In similar news, risk-management firm Crystal Blockchain recently released a report detailing the top cryptocurrency security breaches and fraudulent activities over the past decade. According to the report, decentralized finance (DeFi) exchanges have become an increasingly popular target for malicious actors, with over $2.5 billion lost to DeFi-related breaches, scams and hacks in 2022 alone.
For more information, please refer to the following links:
[View source.]
See more »
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
© BakerHostetler var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + ” “); | Attorney Advertising
Refine your interests »
This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.
Back to Top
Explore 2022 Readers’ Choice Awards
Copyright © var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + ” “); JD Supra, LLC
Author
Administraroot
Related Posts
