Citrea, a project that aims to scale Bitcoin through ZK rollups, came out of stealth on Tuesday. The project aims to become a pathway for several initiatives to take advantage of the decentralization and security of Bitcoin while at the same time contributing to scaling and giving developers the ability to adapt Ethereum Virtual Machine […]
Bitcoin News
Spanish Treasury Proposes Tax Reform to Allow Cryptocurrency Seizures
The Spanish Treasury is proposing a tax reform to allow the seizure of cryptocurrency assets when liquidating tax debts. According to local sources, the proposal would also allow the state administration to embargo these digital assets as it is giving the first steps by declaring electronic money entities as tax collection agents.
Spanish Treasury Seeks to Seize Cryptocurrency for Tax Debts
The Spanish Treasury is seeking to gain control and oversight over cryptocurrency assets owned by taxpayers. The institution proposes reforming the current tax law to allow Agencia Tributaria, the national tax watchdog, to seize the cryptocurrency holdings when executing taxpayers’ debts.
The proposal, made in 2021 to the European Union (EU), will be implemented soon, as local sources explain that the government is quickly moving to create the conditions needed for the reform to be applicable.
The Spanish administration issued a royal decree that now declared electronic money entities as tax collection agents, meaning that these would have to execute embargo actions on the customer’s digital money and crypto assets when required by the government, a duty only required from traditional banks and credit institutions before.
Also, this year, taxpayers will be required to declare, for the first time, the cryptocurrency assets held outside of the country, data that will be useful to apply this new regulation when passed. Data from crypto tax statements obtained since 2021 will also be used to collect money from tax debts when needed.
However, the quick application of these cryptocurrency laws will establish a burden on Spanish regulators, who will have to change their definitions and adapt to the new tax framework and its rules due to their incompatibility with the concepts introduced in EU-wide rules like MiCA, the Markets in Crypto-Assets regulation, which has a different definition of cryptocurrency, and the general EU tax directive to be applied in 2026.
What do you think about the tax reform proposal to allow the Spanish administration to seize and embargo cryptocurrency assets from taxpayers? Tell us in the comments section below.
EU Regulator Proposes Stricter Rules for Foreign Crypto Firms
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator, has proposed stricter rules for crypto firms based outside the EU, limiting their ability to directly serve customers within the bloc to ensure fair competition.
ESMA Proposes Stricter Rules for Non-EU Crypto Firms
The European Securities and Markets Authority (ESMA), responsible for regulating and supervising EU financial markets, published consultation papers on two sets of proposed guidelines under the Markets in Crypto-Assets Regulation (MiCA) earlier this week.
The first set of guidance concerns the rules for the reverse solicitation exemption and the supervision practices national competent authorities (NCAs) may take to prevent its circumvention. To ensure a level playing field for companies within the EU, foreign crypto assets service providers (CASPs) will only be able to directly serve customers within the bloc under very limited conditions. “There is only one exemption, if the client at its own, exclusive initiative contacted the firm and requested the service, the third-country firm may provide it,” ESMA clarified, emphasizing:
Third-country firms may not solicit clients in the Union as they are not authorised to provide CASP services in the Union.
While EU financial laws recognize “reverse solicitation,” where customers reach out directly, recent policy changes tighten up these rules, pressuring foreign firms to establish an EU presence.
ESMA also proposed another set of guidelines to define when a crypto asset qualifies as a “financial instrument” under Markets in Financial Instruments Directive (MiFID) rules, bridging the gap between MiCA and MiFID II for EU-wide consistency.
Stakeholders have until April 29 to submit comments on ESMA’s two consultations. The authority will consider the feedback throughout Q2 and expects to release a final report in Q4. The regulator said:
ESMA, and national competent authorities, through their supervisory and enforcement powers, will take all necessary measures to actively protect European Union (EU)-based investors and MiCA-compliant crypto-asset service providers from undue incursions by non-EU and non-MiCA compliant entities.
What do you think about these proposed rules by ESMA? Let us know in the comments section below.
Ethereum’s Vitalik Buterin Proposes Gas Limit Increase
Amidst escalating transaction fees, Ethereum’s Vitalik Buterin has suggested a substantial gas limit increase, potentially boosting network capacity and reducing user expenses.
Ethereum’s Vitalik Buterin Advocates for Higher Gas Limit to Improve Network Capacity
Ethereum ecosystem co-founder Vitalik Buterin has proposed an increase in the network’s gas limit. This adjustment, aimed at augmenting network capacity, could potentially lower costs for users and enhance transaction efficiency.
Ethereum’s gas limit is the ceiling for the total amount of gas allowed in a single block. Gas, a fee necessary for conducting transactions or executing contracts on the Ethereum blockchain, ensures the network’s operational fluidity. Presently, the gas limit stands at 30 million.
During an Ask Me Anything (AMA) session with the Ethereum Foundation’s research team on Reddit, Buterin suggested a “modest” gas limit increase, proposing a raise to approximately 40 million. This adjustment represents a 33% hike from the current limit. The rationale behind this proposal is to enhance transaction inclusion in each block, thereby boosting overall throughput and network capacity.
While increasing the gas limit could improve network performance, it’s not without risks. Larger blocks require more energy for processing, potentially increasing the likelihood of chain splits and abandoned blocks.
Reflecting on Ethereum’s history, the network has seen a gradual increase in the gas limit, from around 3 million post-launch in 2015 to 15 million following the Berlin hard fork in April 2021.
According to data from Dune, 2023 witnessed a significant spike in network gas fees, with the median price reaching higher than 150 gwei in May, primarily due to the inscriptions frenzy. One gwei equals 0.000000001 ETH. Currently, the average gas price hovers in the low 30s, with an increase since the onset of 2024, particularly for complex smart contract operations. Rising gas fees on the network have led to dissatisfaction among many users, as even basic transactions can become too costly at times.
$ETH / #Ethereum gas fees are ridiculous right now … 😢 pic.twitter.com/4oqQq0jeWZ
— PennybagsCX (@PennybagsCX) December 30, 2023
The proposal has stirred diverse reactions within the Ethereum community. Some, like Gnosis Chain co-founder Martin Köppelmann and Coinbase’s Jesse Pollak, support the increase, with Pollak suggesting a further raise to 45 million. However, Ethereum core developer Dankrad Feist urges caution, pointing out the need to target calldata and blobs per block in conjunction with the overall gas limit in order to get more capacity for L1 applications and rollups.
Buterin’s proposition, if implemented, wouldn’t necessitate a major network update or hard fork. Validators could effectuate this change by modifying certain parameters in their node software. This move could either reduce transaction costs or, more likely, increase network capacity at similar costs, leading to more burn, as per Köppelmann.
Are you in favor of a gas limit increase? Share your thoughts and opinions about this subject in the comments section below.
South Korea Proposes Ban on Credit Card Crypto Purchases
Amidst a national surge in crypto trading, South Korea’s FSC is proposing a significant change to their credit finance laws, potentially barring citizens from the use of credit cards in cryptocurrency transactions.
South Korea Aims to Tighten Crypto Regulations with Proposed Credit Card Ban
The South Korean Financial Services Commission (FSC) is considering an amendment to its credit finance act that would ban the use of credit cards to purchase cryptocurrencies. The Jan. 3 post on the FSC website states that this move is aimed at curbing the illegal outflow of domestic funds and speculative activities associated with buying crypto on foreign exchanges. The proposed change seeks to align the treatment of virtual assets with other prohibited payment methods, addressing concerns about money laundering and the encouragement of speculative behavior.
The FSC’s initiative comes as part of a broader effort to tighten regulations on the local cryptocurrency market, which has been under increased scrutiny. At the same time, South Korea is experiencing a surge in crypto, with two Korean exchanges Upbit and Bithumb contributing over 10% to the global trading volumes. While domestic exchanges in South Korea are subjected to strict rules requiring transaction authentication and partnerships with local banks, foreign exchanges do not face the same level of regulation. The proposal, open for public feedback until February 13, 2024, aims to reduce risks and enhance the transparency and security of crypto transactions.
If passed, the amendment would prevent South Korean citizens from using credit cards to buy cryptocurrencies, effectively limiting their access to virtual assets via foreign platforms. It is possible this is connected with findings from recently introduced tax regulation that, in September 2023, revealed South Koreans held over billion worth of crypto holdings in overseas accounts for the year.
This proposal is indicative of the growing global trend of regulatory bodies seeking to establish a more controlled and secure cryptocurrency environment, reflecting the heightened attention crypto continues to accrue. The decision is expected to be reviewed and potentially implemented in the first half of 2024.
Would banning crypto purchases from credit cards substantively impact most people’s ability to acquire crypto? Share your thoughts and opinions about this subject in the comments section below.
Adam Back States ‘You Can’t Stop JPEGs on Bitcoin,’ Proposes Block Size Increase to Host Inscriptions
Adam Back, CEO of Blockstream and legendary cryptographer, has acknowledged that inscriptions, media embedded directly on top of Bitcoin, cannot be stopped, stating that any action focused on this will only prompt users to do it in “worse ways.” Instead, Back proposed adding a new blob of data to Bitcoin blocks dedicated to inscription purposes.
Adam Back Proposes Block Size Increase to Support Inscriptions
Blockstream CEO Adam Back recognized that fighting Ordinal inscriptions, media embedded directly on the Bitcoin blockchain, is useless. In recent statements posted in X, Back stated that JPEGs (images) on Bitcoin were unstoppable and that any actions directed to stop them would only worsen the situation.
Back declared:
Complaining will only make them do it more. trying to stop them and they’ll do it in worse ways. the high fees drive adoption of layer2 and force innovation. so relax and build things.
Back has been critical of the Ordinals protocol and its purpose since its launch, calling it “inefficient” and “stupid,” prompting developers to use other solutions like IPFS to achieve the same objective.
The issuance of Ordinal inscriptions and stamps, another media embedding protocol on Bitcoin, recently took transaction fees to over . According to Back, a solution to this congestion issue can come in the way of allocating space directed to host this and other Bitcoin-centric data through a “segwit annex” to each block. He explained:
Inscriptors want unavoidable scarcity derived from bitcoin mining and blockspace limits, and they want to pay less not more. so a segwit annex for another 4MW space, paid by miners, with a higher discount than taproot inscriptions.
Back acknowledged this proposal would include a Bitcoin block size increase that would not be required for consensus and would also be used to save Bitcoin wallet-related data.
Many users in the community signaled that Back’s proposal resembled Ethereum EIP-4844, also known as Proto-Danksharding, which adds data blobs with a limited life to the Ethereum blockchain, which also have their own fee market.
What do you think about Adam Back’s “segwit annex” block size increase proposal for Ordinal inscriptions? Tell us in the comments section below.
New Jersey Bill Proposes Classifying All Crypto Tokens Sold to Institutional Investors as Securities
A bill has been introduced in the U.S. state of New Jersey to classify all cryptocurrencies issued and sold directly to institutional investors as securities. In contrast, the U.S. Securities and Exchange Commission (SEC) has previously stated that bitcoin is not a security, but SEC Chairman Gary Gensler views all other crypto tokens as securities.
New Jersey Bill 5747
New Jersey Assembly Bill 5747, sponsored by Representative Herbert Conway, was introduced on Nov. 30 in the New Jersey State Assembly to classify all cryptocurrencies issued and sold to institutional investors as securities. According to the text of the bill:
This bill classifies all virtual currencies issued and sold to institutional investors as securities.
Under the proposed rules, virtual currencies issued and sold directly to institutional investors will be subject to the state’s “Uniform Securities Law” and any regulations promulgated by the Bureau of Securities in the Division of Consumer Affairs to effectuate the purposes of the bill.
The bill has been referred to the Assembly Financial Institutions and Insurance Committee, which will review the bill and conduct hearings for public input. If the committee approves the bill, it will then be sent to the full Assembly for a vote.
The regulatory status of cryptocurrencies remains uncertain at the federal level, with no clear guidance on which tokens are considered securities. While SEC Chairman Gary Gensler has repeatedly stated that most crypto tokens, excluding bitcoin (BTC), fall under the definition of securities, he has refrained from explicitly commenting on ether (ETH). However, a recent court ruling in the SEC v. Ripple case determined that XRP, as a standalone asset, is not a security. Ripple’s chief legal officer, Stuart Alderoty, explained: “As a matter of law — XRP is not a security … The only thing the court found constitutes an investment contract is past direct XRP sales to institutional clients.”
The SEC has identified a number of crypto tokens as securities in lawsuits against various crypto firms, including Kraken, Coinbase, Binance, and Bittrex. These tokens include ADA, AXS, ALGO, ATOM, BNB, BUSD, CHZ, COTI, DASH, FIL, FLOW, ICP, MANA, MATIC, NEAR, NEXO, OMG, SAND, SOL, TKN, and VGX.
What do you think about this New Jersey bill seeking to classify all crypto tokens, including bitcoin, as securities? Let us know in the comments section below.
Blackrock Proposes ‘Revised In-Kind Model’ for Spot Bitcoin ETF to Resolve SEC’s Concerns
Blackrock, the world’s largest asset manager, has held another meeting with the U.S. Securities and Exchange Commission (SEC) to discuss its spot bitcoin exchange-traded fund (ETF) application. The firm has proposed a “revised in-kind” model for its spot bitcoin ETF that it believes will “resolve” the SEC’s concerns. The regulator has reportedly indicated that it prefers spot bitcoin ETFs to use the cash creation method.
Revised In-Kind Model for Spot Bitcoin ETF
Blackrock, the world’s largest asset manager, held another meeting with the U.S. Securities and Exchange Commission (SEC)’s Division of Trading and Markets this week regarding its spot bitcoin exchange-traded fund (ETF) application. According to a memorandum dated Nov. 28 posted on the SEC’s website, the two parties discussed “Nasdaq Stock Market LLC’s proposed rule change to list and trade shares of the iShares Bitcoin Trust.”
The asset management firm explained: “During our 11/20 meeting with Trading & Markets staff, we understood the SEC has certain unresolved questions around the in-kind model relating to balance sheet impacts and risks to the market maker’s U.S. registered broker/dealer entity … during the redemption flow.”
Blackrock proceeded to explain its proposal of a “revised in-kind model,” also called a “prepay model,” which it believes would resolve the SEC’s concerns. “We would like to propose the following approach, that we believe would resolve these concerns,” the world’s largest asset manager wrote. “This model appears to address the staff’s concern with in-kind, addressing the critical dimension on which the in-kind model would otherwise be not preferred to the cash model.” The firm elaborated:
It preserves the many significant benefits to investors of the in-kind model over certain cash models in the context of bitcoin.
Blackrock detailed that the benefits offered by the revised in-kind approach include lower transaction costs, execution risks borne by crypto market makers instead of investors, heightened resistance to market manipulation, elimination of the necessity for issuers to fund or pre-fund sell trades, diminished operational event risks, “and simplicity and harmonization across the ecosystem given significantly lower variance on how in-kind models can be executed vs. cash models.”
Nonetheless, the SEC is said to favor the cash model. Recently, Bloomberg ETF analyst Eric Balchunas shared on X that the SEC’s Division of Trading and Markets has purportedly communicated with exchanges, advising them to opt for the cash-create approach for spot bitcoin ETFs rather than the in-kind method. Following this report, Blackrock held discussions with the SEC to address the matter, maintaining its stance on using the in-kind creation model.
SEC Chair Gary Gensler recently revealed that the regulator is considering between eight and 10 spot bitcoin ETF applications. A number of people have predicted that the securities regulator will approve multiple spot bitcoin ETFs at once early next year.
Do you think the SEC will approve Blackrock’s spot bitcoin ETF application if the asset manager insists on using the in-kind model? Let us know in the comments section below.
Latam Insights: Argentina’s Massa Proposes Blockchain Oversight, Drex Will ‘Kill’ Lesser Cryptos in Brazil
Welcome to Latam Insights, a compendium of Latin America’s most relevant crypto and economic news during the last week. In this issue: Argentine presidential candidate Sergio Massa has proposed to use blockchain for state oversight, the Brazilian securities regulator president stated (CBDC) drex might ‘kill’ lesser cryptocurrencies, and Okx announced an expansion to Brazil in the coming months.
Economy Minister Sergio Massa Proposes Use of Blockchain for State Oversight
Sergio Massa, economy minister and presidential candidate in Argentina, has hinted at using blockchain tech to control state accounts, giving citizens access to this data.
In a recent rally, Massa hinted at creating a blockchain system that would allow Argentines to have access to the execution plan of the national budget using mobile phones. He declared:
We live in the age of communication. I want every Argentine to be able to control the state accounts online from their cell phone. So each of the Argentines has their blockchain when interacting with the state.
Massa said that this system might be used to register contracts between companies executing state work and the government. He stated the system would help to create certainty about the state’s contractual relations, emphasizing the benefits this would bring to the transparency of his hypothetical upcoming administration.
Nascimento: Drex Might ‘Kill’ Many Cryptocurrencies in Brazil
Drex, the Brazilian central bank digital currency (CBDC), might relegate other cryptocurrencies in Brazil to the proverbial dumpster, according to João Pedro Nascimento, president of the Brazilian Securities and Exchange Commission (CVM). At a symposium, Nascimento stated that while most established cryptocurrency projects will be safe, lesser known crypto projects will have their popularity affected due to the functionalities that drex will offer.
Nascimento explained:
I’m not talking about Bitcoin, but drex will reduce the attractiveness of smaller cryptocurrencies.
While there is still no definitive date for drex’s launch, some reports indicate it might happen next year.
Okx Announces Expansion to Brazil
Okx, one of the top cryptocurrency exchanges by volumes traded, revealed it will expand its operations to Brazil in the coming months. Okx Executive President Hong Fang stressed that Latin America and Brazil were “strategic” for the cryptocurrency industry due to the region’s different approach to crypto, which uses these tools as savings instruments and as an inflation hedge.
Fang also clarified that the exchange would adhere to the national cryptocurrency laws whenever they are completed by the national bank, creating a local team for this purpose and offering Portuguese-based customer support.
To follow all the latest developments in crypto and the economy in Latin America, sign up for our Latam newsletter below.
What do you think about this week’s Latam Insights report? Tell us in the comment section below.
Bitstream White Paper Proposes Bitcoin Payments to Disrupt File Storage Economy
Robin Linus, the creator behind BitVM — a computing construct atop the Bitcoin blockchain — released a new white paper on November 11, 2023, entitled “Bitstream.” The document explores a system aimed at reforming the economic structure of file storage, suggesting a usage-based model that rewards server contributions with bitcoin payments.
Bitstream Revealed: A White Paper’s Bitcoin-Based Bid to Overhaul Data Hosting
The Bitstream white paper, authored by blockchain programmer Robin Linus, unveils a method where servers receive direct payments in bitcoin (BTC) for each file download they facilitate. Addressing the imbalance in current hosting economics, Linus’ system aligns server profit with content demand.
Servers are compensated for providing a service to the network, namely the distribution of files, the white paper explains. The system “creates a directory of accountable servers from which clients can choose,” Linus’ paper details.
The Bitstream system capitalizes on Bitcoin’s payment channels, including technologies like the Lightning Network, Liquid, Chaumian ecash, Fedimint, or Cashu to afford swift microtransactions for file access.
“The server encrypts the file such that if there’s any mismatch during decryption the client can derive a compact fraud proof,” the paper notes. “A bond contract guarantees the client receives the exact file or they can punish the server.”
In Bitstream’s design, the use of a Merkle tree for file verification promotes both the uniqueness and security of hosted data. By breaking down files into hashed components, the system can quickly confirm the accuracy of the content being transferred.
Linus has adopted a straightforward encryption method, using the one-time pad cipher for its uncompromising security guaranteed by the bitwise XOR operations. “If the encrypted file does not decrypt correctly, the client can derive a succinct fraud proof,” the Bitstream white paper explains.
After Linus published the paper several people were enthusiastic while others were more critical. “Are you just planning to keep revolutionizing Bitcoin every 2 months or so?” one person asked the programmer.
“File hosting is already an at the margin commodity service, and hash based redundancy is achieved over Webtorrent where needed,” another more critical individual said. “A less perfomant inclusion of user edge storage and bandwidth doesn’t solve any particular problem.”
Linus has also been working on the BitVM concept after unveiling that specific white paper last month. We just broadcasted the first mainnet transaction having a Blake3 hash lock implemented in Bitcoin Script,” Linus posted on X on November 6. “One small opcode for BitVM, one giant script for Bitcoin,” the developer added.
The Bitstream framework offers a variation to conventional data hosting methods, yet its practical application remains to be seen. The white paper’s proposal believes it has proposed an “incentive system for decentralized file hosting without relying on trust or heavy-weight cryptography.”
What do you think about the Bitstream white paper? Share your thoughts and opinions about this subject in the comments section below.