Bitcoin Network Mining Difficulties Continue Downtrend Amid Heatwave

By Jordan R. Goldsmith

A recent analysis of Bitcoin mining activity showed that the Bitcoin network’s mining difficulty recently dropped by 5%, continuing a three-month downward trend since hitting its all-time high in May 2022. This is the third consecutive downward adjustment to mining difficulty and the first time since last July when China banned Bitcoin mining. Reports say this time the drop in difficulty is due to US miners shutting down their machines for the past two weeks due to soaring electricity prices as record heat waves hit. extended. Rising mining costs have reportedly had significant effects on miners in Texas, which is experiencing warmer than usual temperatures that have caused some miners to cease operations in order to adjust to the load on the energy grid of State. Although extraordinary electricity costs have led some industrial-scale miners in Texas and beyond to scale back mining, some miners could benefit. Analysts believe that the lower difficulty is good news for small-scale Bitcoin miners, as lower difficulty allows miners to confirm transactions using fewer resources, allowing small-scale miners to compete with the big ones. miners for mining rewards.

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CFTC Chairman Addresses Crypto; Proposed Bill Would Simplify Crypto Tax Rules

By Keith R.Murphy

The U.S. Commodity Futures Trading Commission (CFTC) recently released a keynote speech by Chairman Rostin Behnam on the future of cryptocurrency regulation. Among other observations, Chairman Behnam noted that despite reports suggesting that one in five American adults have invested in cryptocurrency or otherwise used it, the market has grown without regulatory limits. clearly delineated, adding that the recent “crypto winter” has reinvigorated the call for a regulatory approach. Behnam said the U.S. digital asset industry does not fall under a single regulatory regime and later suggested that “as with any commercial market, the digital asset market would benefit from a uniform imposition of requirements aimed at ensuring certain fundamental principles, including market integrity, customer protection, and market stability.” Among other statistics, he shared that the CFTC has taken more than 50 enforcement actions since 2014, including for misconduct related to digital assets, retail fraud involving digital assets, illegal offering of over-the-counter exchanges of digital assets, and false or misleading statements and omissions.According to Federal Trade Commission information shared by Behnam , since 2021, more than 46,000 people are said to have lost over $1 billion in cryptocurrency to scams, and the top cryptocurrencies used for pa yer scammers include bitcoin, tether and ether. Behnam promised that the CFTC would continue to use its enforcement power 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 Virtual Currency Tax Fairness Bill, small personal cryptocurrency transactions under $50 would be exempt from capital gains tax. Under current law, a chargeable event occurs each time a digital asset is used. The proposed bill, which has received positive feedback from the cryptocurrency industry, would include an aggregation rule that identifies related sales and trades as a single transaction in an effort to prevent potential tax evasion .

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Members of Congress Criticize SEC Bulletin on Treatment of Crypto Accounting

By Christina O. Gotsis

At the end of July, four members of Congress sent a letter to the United States Securities and Exchange Commission (SEC) asking it to withdraw a bulletin that advises on the accounting treatment of crypto-assets. The SEC Bulletin advises public companies, as well as private companies that combine with special purpose acquisition companies, to report crypto assets as liabilities and provide additional information regarding the value of those assets. This represents a departure from the practice of holding assets on deposit in separate accounts off the balance sheet. Members of Congress warned that the change would make safekeeping of those assets by banks “economically unfeasible” and claimed the SEC failed to follow “proper process,” such as providing a public comment period.

While SEC Commissioner Hester Peirce called the bulletin a “dispersed and ineffective” attempt at crypto regulation, SEC Chairman Gary Gensler argued that the measure will help protect investors in a context of slowing digital asset markets. Gensler defended the bulletin, SEC Staff Accounting Bulletin No. 121, saying the bulletin follows the same process as the 120 bulletins before it in its mission to protect investors. Gensler reportedly called the newsletter “advice” for companies seeking accounting advice for crypto assets. The bulletin itself also notes that these are “interpretative guidance for entities to consider” and do not carry “formal endorsement” by the agency. Gensler reportedly noted that a bank failure puts customers’ digital assets at risk and that these assets “are not developed enough” and are “different enough” from traditional assets such as stocks or bonds.

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DOJ, SEC, and OFAC Continue Cryptocurrency Enforcement Actions

By Robert A. Musiala Jr.

This week, the US Department of Justice (DOJ) issued a press release announcing that Michael Stollery, “[t]The CEO of Titanium Blockchain Infrastructure Services Inc. (TBIS)[,] pleaded guilty… to his role in a cryptocurrency fraud scheme involving TBIS’ initial coin offering (ICO) that raised approximately $21 million from investors in the United States and abroad. ‘foreign. According to the press release, Stollery admitted to making a series of false and misleading statements to buyers of tokens in the TBIS ICO and mixing ICO investor funds with his personal funds, using some of the proceeds to his personal expenses. Stollery pleaded guilty to one count of securities fraud and faces up to 20 years in prison.

According to reports released this week, two major US cryptocurrency exchanges may be under investigation by government agencies. A report noted that, according to sources, a major US exchange is under investigation by the US Securities and Exchange Commission (SEC) regarding certain publicly traded cryptocurrency tokens. Another report provides details of a reported investigation of another major US cryptocurrency exchange by the US Treasury Department’s Office of Foreign Assets Control (OFAC). According to reports, OFAC’s investigation relates to alleged sanctions violations involving exchange clients in Iran, Syria and Cuba.

In a final development, blockchain analytics firm Chainalysis has released The Chainalysis 2022 Survey on the State of Cryptocurrency Investigations. The survey asked a population of public sector employees on topics related to the successes and challenges of cryptocurrencies. Among other things, survey respondents expressed the following sentiments: (1) cryptocurrency will advance the financial system in a positive way; (2) cryptocurrency is prevalent in a variety of types of crimes, including narcotics, fraud, theft, and cybercrime; (3) accurate data, transaction visualization, and training are essential for effective use of blockchain analytics tools; and (4) 74% indicated that their government agency is currently not well equipped to investigate cryptocurrency-related crimes.

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Reports Show Hackers Are Turning To Cryptojacking And DeFi To Siphon Crypto

By Lauren Bass

According to a recent report by cybersecurity firm SonicWall, global cryptojacking incidents hit record highs earlier this year. Cryptojacking refers to a cyberattack in which hackers plant malware on a computer system and then surreptitiously commandeer that system to mine cryptocurrency for the hackers’ benefit. The total number of incidents increased by 30%, with the retail sector experiencing a 63% increase and the financial sector a 269% increase in attacks since the start of the year. The report suggests that (1) the decline in ransomware attacks, (2) the system vulnerability caused by Log4j, and (3) the ability of cryptojackers to operate under the radar have all contributed to the rise in popularity of cybercrime.

In a similar vein, risk management firm Crystal Blockchain recently released a report detailing top cryptocurrency security breaches and fraudulent activity over the past decade. According to the report, decentralized financial exchanges (DeFi) have become an increasingly popular target for malicious actors, with over $2.5 billion lost to breaches, scams and hacks related to DeFi nothing only in 2022.

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