ProBit Bits — ProBit Global’s Weekly Blockchain Bits Vol. 26

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Chainalysis declares October big for crypto hacks, Portugal is now planning to impose 28% tax on crypto gains, and the oldest bank in the US is to hold crypto for clients. Click to read this edition of ProBit Global’s Weekly Blockchain Bits.

 Chainalysis on October being big for crypto hacks

Crypto analytics firm, Chainalysis, last week described October as “the biggest month in the biggest year ever” for hacking activity. It follows four hacks recorded in a day and $718 million reportedly stolen from decentralized finance (DeFi) protocols across 11 different hacks while the month is still halfway.

Chainanaylisis Tweet

The firm notes that should the hacks continue at the same rate — with hackers already raked inover $3 billion across 125 hacks so far — 2022 will likely surpass 2021 as the biggest year for hacking on record.

It also points to the shift in the targets of hacks. It says most hacks used to target centralized exchanges, but are now focused on DeFi protocols, particularly cross-chain bridges in which three have been breached this month. About $600 million has been stolen from the bridges, accounting for 82% of losses in October and 64% of losses for the whole year.

The UN Security Council released their DPRK Panel of Experts report into North Korea’s theft and crypto laundering to evade sanctions the same week.

 Miners will be forced to exchange capital on Kazakhstani crypto exchanges in 2024

Crypto-related transactions are to be confined within Kazakhstan’s Astana International Financial Center (AIFC). Meanwhile, a member of the Kazakh lower house’s Committee on Economic Reform and Regional Development, Ekaterina Smyshlyaeva, last week called for the development of Kazakhstani crypto exchanges to be supported by a mandatory 75% exchange of miners’ capital starting in 2024. It is part of the legislative regulation being considered in the field of digital assets.

TASS reports that five related bills including one that requires Bitcoin miners to create legal entities and become formal tax subjects are being developed.

Aside from the existing equipment import VAT and digital mining fees per kilowatt, it is also proposed to levy corporate income tax, mining pool income tax, cryptocurrency operating fees, and corporate income tax on miners’ remuneration. The bills are to create a legislative framework for the production and circulation of secured and unsecured digital assets, Smyshlyaeva said.

 Portugal plans to impose 28% tax on crypto gains

In a draft budget for 2023, the Portuguese authorities propose a 28% capital gains tax on cryptocurrency transactions held for less than a year. Crypto assets held for more than 365 days are free from taxation, the draft says.

It intends to create a broad and adequate fiscal framework applicable to crypto assets, and forms parts of efforts to confer security and legal certainty to the asset class. The move would help create a regime and promote the crypto economy even as Portugal positions itself as a digital base and is willing to train the national labor market on digital skills.

 Bitmain takes its annual mining summit to Mexico

Top cryptocurrency mining equipment manufacturer, Bitmain, is taking its World Digital Mining Summit (WDMS) to Cancun, Mexico. Its focus this year is on PoW Power and Mining Impetus, it notes on its website. It will also dive into efficient and clean mining, discuss hydro cooling technology, and brainstorm on the digital future of Latin America. The announcement comes as last week saw the Bitcoin mining difficulty increase significantly by 13.55%, the largest since May 2021.

 America’s oldest bank to now hold crypto for clients

Bank of New York (BNY) Mellon, the oldest bank in the US, last week said it would start receiving and holding clients’ cryptocurrencies after it received the approval of New York’s financial regulator earlier this fall. WSJ reports that BNY Mellon would become the first large US bank to safeguard digital assets alongside traditional investments on the same platform. It adds that the move marks an important milestone for traditional banks and their growing acceptance of digital assets as a legitimate market and a source of new business.

 Google to start collecting cloud service payments via crypto

Some Google customers will be able to pay for cloud services with digital currencies early next year, the tech giant last week announced at Google’s Cloud Next conference.

Google is exploring using Coinbase Prime, a service for storing and trading cryptocurrencies for its new services that are aimed at attracting cutting-edge companies to it.

On its part, Coinbase will move some of its retail transactions and data-related applications to Google’s cloud from Amazon Web Services which the exchange had relied on for years.

According to CNBC, the Google Cloud Platform infrastructure service will initially accept cryptocurrency payments from a few Web3 customers who want to pay with cryptocurrency. Later, Google will allow more customers to pay with crypto.

Still, on Coinbase, Bloomberg reports that the Monetary Authority of Singapore last week granted Coinbase Singapore in-principle approval under the Payment Services Act to provide regulated services in the city-state.

 Bittrex agrees to OFAC, FinCEN settlement over AML violations

In their first parallel enforcement actions in the crypto space, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) and Financial Crimes Enforcement Network (FinCEN) last week agreed to settlements with Bittrex crypto exchange for over $24 million and $29 million respectively.

OFAC and FinCEN found that Bittrex violated multiple sanctions programs and the Bank Secrecy Act’s (BSA’s) anti-money laundering (AML) and suspicious activity report (SAR) reporting requirements. They say Bittrex’s AML program and SAR reporting failures “unnecessarily exposed the U.S. financial system to threat actors.”

Bittrex agreed to settle its potential civil liability for 116,421 apparent violations of multiple sanctions programs. The exchange also reportedly failed to prevent persons apparently located in the Crimea region of Ukraine, Cuba, Iran, Sudan, and Syria from using its platform to engage in approximately $263.5 million worth of crypto transactions between March 2014 and December 2017.

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