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Happy Thursday <<First Name>>!

As there is turmoil on the crypto market, we have a lot of interesting news for you this week. From key highlights about Binance's registration in France and the drop of TerraUSD to crypto news in Asia, we've got it all covered for you. Don't forget to check out the Advanced Info section as multiple exciting reports have been published recently.

Enjoy!

Highlights

🤩 Binance chooses Paris as its European trading hub as it seeks to establish itself as a regulated financial player. The company said it would make Paris its European hub after France's financial markets regulator formally granted Binance the right to offer and market its services to local customers. Binance operated a trading website world-wide but has long operated without an official headquarters and without registration in many countries.

😱 TerraUSD, also known as 'UST', one of the world's largest stablecoins, lost a third of its value on Tuesday, spooking cryptocurrency investors and partly contributing to bitcoin's tumble below $30,000 for the first time in 10 (ten) months. UST is a so-called algorithmic stablecoin and is pegged to the US dollar, which essentially means that the value of 1 UST is 1 USD. This week UST broke its 1:1 peg to the dollar and fell as low as 27 cents.

Tax

🤑 The official letter and interpretation of crypto taxation in Germany by the German Ministry of Finance has been published. The sale of acquired crypto-assets will remain tax-free after one year, even if used for staking/lending. This is great news and leads to more legal clarity in Germany. Check out the quote below for more insights on this topic!

Legal

👩🏼‍⚖️ The UK High Court has recognised NFTs as 'legal property' in a landmark case. The case was filed by the founder of Woman in Blockchain Talks, Lavinia Osbourne. She claims that two NFTs from the Boss Beauties collection, which were designed to "create opportunities" and raise funds for females, were stolen from her online wallet.

😎 The victims of a hack of DeFi platform bZx are vying for the return of their funds in a rare attempt to hold a DAO liable in court. The entities behind the bZx cryptocurrency protocol face a proposed class action lawsuit that alleges a hack in which $55 million in assets was stolen stemmed from the "simple negligence" of one developer who fell prey to a phishing scheme.

🌎 According to Mairead McGuinness, commissioner for Financial Services, Financial Stability and Capital Markets Union at the European Commission, cryptocurrency is going mainstream. To enable innovation in finance while effectively protecting consumers, we need a global approach to regulating crypto in her opinion.

Coinbase

🫣 CEO Brian Armstrong addressed concerns that traders have been taking advantage of the company's listing process. Therefore, Coinbase will no longer publish a shortlist of assets it is considering listing, instead only publishing new listings after a decision has been made.

Asia

🇨🇳 The People's Bank of China (PBOC), China's central bank, is continuing to test its central bank digital currency (CBDC) with yet another digital yuan giveaway. The government of Shenzhen's Futian district has announced that 15 million yuan ($2.27 million) in digital RMB (the digital yuan) would be distributed to local citizens.

🇮🇳 In a bid to enhance India's cybersecurity and crypto infrastructure, the Indian Computer Emergency Response Team (CERT-In) has mandated all Virtual Private Network (VPN) providers and crypto exchanges to maintain customer data records for up to five (5) years. The rules will come into effect in June 2022.

🏴󠁡󠁥󠁤󠁵󠁿 Dubai's Virtual Assets Regulatory Authority (VARA) announced its entry into the metaverse with the establishment of its metaverse headquarters in the dynamic virtual world of "The Sandbox". This move reflects Dubai's commitment to the New Economy and confidence in the security and sustainability of Web 3.0 ecosystems.

SEC

🫣 The Securities and Exchange Commission (SEC) announced settled charges against technology company NVIDIA Corporation for inadequate disclosures concerning the impact of crypto mining on the company's gaming business. Besides that, the SEC announced the allocation of 20 additional positions to the unit responsible for protecting investors in crypto markets and from cyber-related threats. The newly renamed Crypto Assets and Cyber Unit (formerly known as the Cyber Unit) in the Division of Enforcement will grow to 50 dedicated positions.

Capitulation because of extreme drop Terra Luna (Dutch)
This episode of Satoshi Radio focuses on the tin ice the hosts have been talking about over the past few months: the 40k limit on which bitcoin settled felt too good to be true. And it turned out to be just that, when the UST stablecoin collapsed this week. This crash took the already turmoil crypto market down with it. Bitcoin has gone 30% in red in the last few days, while the average altcoin is collapsing twice as hard. What happened? And how do the men themselves deal with capitulation? Also, our very own Willem-Jan Smits (lawyer and co-founder of Watsonlaw) gives a short interview in this episode about the Binance registration in France, as mentioned under 'Highlights' above.

Fungibility and Interoperability of CBDC (English)
In this episode of the Digital Euro Podcast, Valentin Seehausen talks with Jannah Patchay about the fungibility and interoperability of CBDC. Jannah works for the Digital Pound Foundation and is specialised in financial markets innovation, and in helping firms to define, develop and execute their commercial strategies in a highly regulated environment. Her passion lies in building the capital markets in the future, harnessing emerging technology to create new and innovative financial services and products that can promote wider social benefit and greater access to financial services.

"For individuals, the sale of acquired Bitcoin and Ether is tax-free after one year. The period does not extend to ten years even if, for example, Bitcoin were previously used for lending or (...) as a stake (...). A supplementary letter on the cooperation and recording obligations is already in the works".

- Katja Hessel (Parliamentary State Secretary)

😜 Bloomberg released its latest Bloomberg Intelligence report for May which discusses the adoption of bitcoin and other cryptocurrencies, markets, and the unprecedented advances of monetary technology. The report explains, among other things, how bitcoin is separating itself from standard risk-assets and is becoming a risk-off asset.

💸 The International Swaps and Derivatives Association (ISDA) released its paper called 'Accounting for Digital Assets: Key Considerations'. This paper explores the accounting implications of recent investment in and use of digital assets, including, but not limited to, cryptocurrencies. The paper aims to identify and illustrate how digital assets are accounted for.

🫣 [Dutch] Europol published its report on criminal use of cryptocurrencies. The report gives an overview of the illegal use of cryptocurrencies and includes key definitions, case examples and details on the challenges authorities face in combating the illicit use of such digital currencies.

🔥 According to a new report 'Crypto on the rise 2022' from Thomson Reuters Regulatory Intelligence (TRRI), the incredible growth of crypto-assets and their intersection with the globally regulated financial system has produced complex regulatory and legal challenges. The report examines some of the risks and benefits of this next iteration of digital transformation.

Postscript

Thank you for reading the latest edition of the Watsonlaw newsletter. If you have any content-related recommendations or news you'd like us to share for next time, please don't hesitate to reach out to info@watsonlaw.nl or even better, directly connect with our team members Willem-Jan Smits and Jorie Corten. To stay up to date with all our updates and connect with our team, follow Watsonlaw on LinkedIn. Did we miss anything? Or perhaps something got you particularly intrigued? Do send us a message and let's talk! Ciao for now and see you again next time!

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Watsonlaw is a 's-Hertogenbosch-based law firm specializing in corporate and civil matters and the legal implications of new technologies in everyday life and business.

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