This week’s Law Decoded: In Australia, the regulators rattle the saber while the adoption is taking a major leap


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In Australia, the regulators rattle the saber while the adoption is taking a major leap

22–29 August, 2022
Written by David Attlee

Australia's financial regulator, Securities and Investments Commission (ASIC), has pledged to put crypto assets and decentralized finance (DeFi) firmly in its sights over the next four years. The regulator intends to focus on "digitally enabled misconducts" and to protect investors "from harms posed by crypto-assets." Given the ASIC's history of anti-crypto sentiments, such an announcement could be perceived as hostile, but at least it contains a promise to implement some regulatory framework that is still absent.

And, it is hardly a coincidence that the announcement came only days after Australia's new ruling government announced plans to move forward with regulation of the crypto sector by conducting a "token mapping" exercise by the end of the year.

At the same time, Australia's Northern Territory Racing Commission (NTRC) is preparing to adopt cryptocurrencies as a wagering option. The NTRC has sent a private document out to licensees, which seeks input and feedback on what the regulatory landscape could look like to get crypto wagering off the ground in the Northern Territory. Should this go according to plan in the Northern Territory, other state gambling regulators would likely follow.

No "free coins" without taxation in South Korea

The South Korean Ministry of Strategy and Finance cleared that virtual asset airdrops, staking rewards, and hard forked tokens would be subject to a gift tax under the Inheritance and Gift Tax Act despite the postponement of crypto gains tax to 2025. Any free virtual asset transfer by crypto exchanges in the form of airdrops, staking rewards and hard-forked tokens would attract a gift tax, which will be "levied on the third party to whom the virtual asset is transferred free of charge."

MakerDAO has no choice but to prepare to free-float Dai

MakerDAO co-founder Rune Christensen reached out to the community explaining why free-floating Dai (DAI) may be the only choice for the decentralized autonomous organization. "Physical crackdown against crypto can occur with no advance notice and with no possibility of recovery even for legitimate innocent users. This violates two core assumptions that we used to understand RWA risk, making the authoritarian threat a lot more serious," he stated.

Ethereum community splits over solutions for transaction censorship

In the wake of the United States government sanctions on Tornado Cash-linked addresses, the Ethereum community gets divided over how to best respond to the threat of protocol-level transaction censorship. Over the last week, Ethereum community members have proposed social slashing or even a user-activated soft fork as possible responses to transaction-level censorship on Ethereum, with some calling it a "trap" that will do more harm than good and others stating its necessary to provide "credible neutrality and censorship resistance properties" on Ethereum. The heated debate comes after Ethereum miner Ethermine elected not to process transactions from the now U.S.-sanctioned Ethereum-based privacy tool Tornado Cash.

Further reads 📚

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Tom Tirman from IQ Protocol believes that FDIC–FTX spat is another reason for investors to get their funds off exchanges
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