Arijit Sarkar
The United States Office of Government Ethics (OGE) issued a legal advisory recommending various instances when senior government officials are required to disclose their investments in nonfungible tokens (NFT).
In the legal advisory presented to the designated agency ethics officials, director Emory Rounds III said that all NFT investments — both fractionalized (F-NFTs) and collectibles — worth $1,000 must be reported if “held for investment or production of income” at the end of the reporting period.
The guidance provided by the federal agency also requires reporting of NFT investments if officials made profits over $200 during the reporting period, adding that:
“Public financial disclosure filers must also disclose purchases, sales, and exchanges of collectible NFTs and F-NFTs that qualify as securities.”
The advisory primarily targets reporting of NFTs investments that represent “property,” such as real estate. However, the OGE previously ruled that personal assets, including clothing, electronics or family photos — or NFTs representing the same — are not reportable.
Based on the circumstances disclosed by each filer, collectibles may or not be required to disclose as financial investments. Rounds laid down seven questions to help filers self-determine their reporting requirement, as shown below.
1. Was the NFT purchased principally for personal or family use or aesthetic reasons?
(If yes, suggests NFT is not held for investment or production of income)
2. Was the NFT purchased principally for its potential future value?
(If yes, suggests NFT is held for investment or production of income)
3. Will the NFT be used by the filer or the filer’s family members or displayed in the home, office, or virtual property of the filer or filer’s family members?
(If yes, suggests NFT is not held for investment or production of income)
4. Is the NFT considered rare, expensive, or is it currently highly sought after?
(If yes, suggests NFT is held for investment or production of income)
5. Did the filer pool resources with other investors or non-family members to purchase the NFT?
(If yes, suggests NFT is held for investment or production of income)
6. Is the NFT owned by the filer indirectly, for example is it held by a limited liability company or limited partnership?
(If yes, suggests NFT is held for investment or production of income)
7. Does the filer have a pattern of purchasing and selling collectible NFTs?
(If yes, suggests NFT is held for investment or production of income)
Filers have been advised to use the OGE Form 278e for reporting NFT investments, wherein investors must include details such as the value, income type and income amount of all eligible NFTs. The OGE revealed to continue monitoring advancements in crypto and modify the above guidance as deemed necessary in the future.
Congressman Brad Sherman advised the Securities and Exchange Commission (SEC) to pursue securities cases against cryptocurrency exchanges with “fortitude and courage.”
Highlighting SEC’s attempt to investigate crypto exchanges, enforcement director Gurbir Grewal referred to a case brought against Poloniex in August 2021. However, Sherman pointed out the need for pursuing investigations against bigger exchanges such as Binance and Coinbase:
“The big fish operating the major exchanges did many, many tens of thousands of transactions with XRP. You know it’s a security — that means they were illegally operating a securities exchange. They know it’s illegal because they stopped doing it, even though it was profitable. [...] I hope you focus on that.”
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Brian Quarmby
The major bipartisan crypto bill led by United States Senators Cynthia Lummis (Republican) and Kirsten Gillibrand (Democrat) will most likely be deferred to next year according to the duo.
Speaking during Bloomberg’s Crypto Summit on Tuesday, the Senators stated that there is a slim chance that the comprehensive bill would be pushed through the Senate this year, with Lummis noting that:
“I think both Kirsten and I believe that the bill, in one piece, as a total bill is more likely to be deferred until next year. It’s a big topic, it’s comprehensive, and it’s still new to many U.S. Senators and so it’s a lot for them to digest in the few remaining weeks we have in this calendar year.”
The Responsible Financial Innovation Act was introduced in the U.S. Senate on June 6 and aims to address the role of the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) when it comes to crypto regulation, along with stablecoin regulation, banking, tax treatment of digital assets and interagency coordination.
The pair, however, noted that there may be specific areas of their bill that could make it through this year via other legislation, with Gillibrand highlighting that fellow Democrat Senator Debbie Stabenow and Republican ranking member John Boozman are working on a bill proposing the CFTC as the key regulator for crypto.
The bill rolls in certain parts from the Lummis/Gillibrand legislation in relation to most digital assets being classified as commodities and therefore falling under CFTC jurisdiction.
Lummis also noted that the part of their bill focused on the regulation of stablecoins issued by financial institutions could also be rolled into another bill from the banking committee and voted on this year.
The senators noted that they have seen a relatively positive response to the bill from both sides of the political spectrum.
“There seems to be some serious common ground forming, and just as Senator Lummis said, the two committees that have the most focused Senators on this topic are banking and agg [agriculture],” Gillibrand said, adding that there’s also been some focus from the finance committee as “Senator Wyden and his committee wrote a good part of the tax provisions in our bill.”
While the duo accepts that their comprehensive crypto bill will take time to get the proper attention before it gets voted on next year, Gillibrand emphasized that fellow Senators, regulators and lawmakers are beginning to realize the urgent need to at least get consumer protections in place:
“There’s additional interest now, because they’ve seen that this is something important to do, that consumers are not being protected today, there’s no oversight or accountability, and there’s no rules of the road.”
“So there’s more urgency now, and also more of a sense that this is something we need to do,” she added.
The comments were made in reference to the recent bankruptcy proceedings from crypto lending firms such as Celsius and Voyager, in which users have been put at severe risk of losing their deposited assets on those platforms.
Lummis also pointed to the $40 billion Terra ecosystem collapse in May and the risky nature of algorithmic stablecoins, which require further oversight.
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Derek Andersen
Skybridge Capital has suspended withdrawals from its Legion Strategies fund – one of the firm’s funds with crypto exposure. Founder Anthony Scaramucci confirmed the move on Tuesday in an interview on CNBC after Bloomberg reported it a day earlier, citing anonymous sources.
“Our board made the decision to temporarily suspend until we can raise capital inside the fund,” Scaramucci told CNBC. “The fund is unlevered, so there’s definitely no fear of any liquidation whatsoever and about 18% of the fund is in what we would call crypto exposure.” An independent board also took part in the decision, Scaramucci said.
Scaramucci mentioned Bitcoin (BTC) and FTX stock as examples of the fund’s crypto exposure. Among other crypto-related companies listed as investments on the Skybridge website, not specifically linked to Legion Strategies, are Kraken, NYDIG, Helium, Lightning and Genesis Digital Assets. Scaramucci said the Legion Strategies fund was down 30% year-to-date but up 5% in July.
Legion Strategies is an offshore fund based in the Cayman Islands that has about $250 million in it, according to Scaramucci. It is one of the smaller funds run by the company. This was the first time the fund had been suspended since its founding in 1994. Skybridge itself was founded in 2005.
Scaramucci told CNBC:
“Everybody signed an investor agreement, this type of flexibility, so I don’t think there are any surprises here given what’s going on in the overall market.”
Skybridge is among the financial services companies that have applied to list a Bitcoin exchange-traded fund (ETF) and has been rejected by the United States Securities and Exchange Commission (SEC).
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This Daily Dose was brought to you by Cointelegraph.
