Utah is considering a new proposal to allow for the creation of a state crypto strategic reserve using public funds. Utah State Representative Jordan Teuscher, a Republican, has introduced a bill that would allow the state treasurer to invest public funds in digital assets like Bitcoin (BTC) and stablecoins. Says Teuscher, “Utah is proud to […]
The post Utah Introduces Bill Allowing State Treasurer To Invest Public Funds in Crypto appeared first on The Daily Hodl.
71 Democrats joined their Republican colleagues in a rare bipartisan effort to repeal the SEC’s SAB-121 guidelines from earlier this year.
Congressperson John Curtis, a United States representative for the state of Utah, took the stage at Permissionless III with Utah Senator Mike Lee to discuss the future of digital asset policy in the country.
When asked if the bipartisan cooperation on the repeal of Staff Accounting Bulletin-121 (SAB-121) — which made it incredibly restrictive for banks to custody crypto — was making a comeback, the member of Congress responded, “I think so, but it’s very fragile.” He continued:
“So, I think it’s important to find connection points with Democrats” to reach a consensus on regulatory policy, Curtis concluded, before noting that fellow lawmakers had trouble understanding the complexity of cryptocurrencies.
A judge ordered the U.S. Securities and Exchange Commission to pay $1.8 million following “bad faith conduct” over a temporary restraining order to freeze DEBT Box’s assets.
The United States Securities and Exchange Commission (SEC) will close one of its eleven regional offices after a federal judge ordered the regulator to pay roughly $1.8 million in attorney and receivership fees.
In a June 4 notice, the SEC said it would close its Salt Lake Regional Office in 2024—just one of eleven regional offices in the country. The commission said the closure was due to “significant attrition” at the office and planned to shift operations to Denver.
The announcement came roughly a week after Judge Robert Shelby dismissed the SEC’s civil lawsuit against Digital Licensing, the firm doing business as DEBT Box. He also signed off on an order requiring the SEC to pay roughly $1 million for attorney fees and costs and $750,000 for receiver fees and costs.
The civil lawsuit initially filed by the commission in 2023 ended on May 28, with a judge ordering the SEC to pay attorney and receivership fees.
A federal judge has ordered the United States Securities and Exchange Commission (SEC) to pay roughly $1.8 million in attorney and receivership fees related to the regulator’s civil case against Digital Licensing, the firm doing business as Debt Box.
In a May 28 filing in the U.S. District Court for the District of Utah, Judge Robert Shelby signed off on an order requiring the SEC to pay roughly $1 million for attorney fees and costs and $750,000 for receiver fees and costs. The order came the same day as one dismissing the case without prejudice.
The judge cited a March ruling in which a court found the SEC “engaged in bad faith conduct” over a temporary restraining order to freeze Debt Box’s assets. The firm later filed documents with the court claiming that the commission’s information was inaccurate, leading to the threat of sanctions.
As cryptocurrency becomes a significant part of American investment portfolios, its influence extends beyond digital transactions into tangible impacts on real estate markets and household spending, a recent study finds. Report Shows Cryptocurrency Wealth Adds ‘Meaningful Implications for the Real Economy’ The study, first reported on by Bloomberg, analyzes bank and credit card data from […]
Prosecutors argued SafeMoon CEO Braden John Karony poses a flight risk given his alleged access to funds and overseas connections.
United States federal prosecutors have managed to put SafeMoon CEO Braden John Karony’s bail release order on hold, citing flight risk and his release being a possible “danger to the community.
On Nov. 9, New York District Judge LaShann DeArcy Hall stayed a Nov. 8 bail release order after prosecutors challenged a Utah Magistrate judge’s decision to let Karony out on a $500,000 bail.
Prosecutors made the challenge to Judge Daphne Oberg’s decision in New York, saying the release order was given “without consideration of the defendant’s substantial financial means and ability to flee” and added his release posed a “continued danger to the community.”
“If convicted, the defendant faces a statutory maximum of 45 years’ imprisonment,” prosecutors wrote.
“These facts all provide powerful incentives for the defendant to leverage his substantial (and opaque) financial assets and foreign ties to avoid that outcome.”
Judge Oberg’s Nov. 8 order would have permitted Karony to stay at his Miami apartment and barred him from accessing crypto exchanges or wallets, holding or transacting crypto and banned him from engaging in promotional activities.
Prosecutors however claimed the Utah court overlooked Karony’s assets when setting his bail at $500,000. They alleged the SafeMoon chief provided “almost no information concerning his finances” and claimed he can access “assets totaling millions of dollars.”
Karony also has “substantial and ever-expanding” overseas ties and has spent months outside the U.S. in Europe and the United Kingdom with his fiancée, a British citizen and resident, prosecutors alleged.
Prosecutors also asked the court to transport Karony to New York and have him detained there which Judge Hall will consider at a later date.
Related: SafeMoon addresses recent exploits amid SEC charges
Karony was arrested on Oct. 31 at Salt Lake City International Airport and was charged alongside SafeMoon creator Kyle Nagy and chief technology officer Thomas Smith with conspiracy to commit securities and wire fraud and money laundering conspiracy.
The Securities and Exchange Commission also charged the trio with various fraud charges and unregistered securities sales and alleged they misappropriated funds to purchase SafeMoon (SFM) tokens to prop up its price.
SafeMoon technology chief Thomas Smith was released on a $500,000 bond on Nov. 3 and is pursuing a plea deal while the Department of Justice said Nagy remains at large.
Magazine: Deposit risk: What do crypto exchanges really do with your money?
How the Utah DAO Act went from an idea to a piece of legislation — and the challenges along the way.
In March, the Utah State Legislature passed the Utah DAO Act, granting legal recognition and limited liability protections to decentralized autonomous organizations (DAO) in the state.
DAOs by default are not recognized as legal entities, and giving these organizations legal status in Utah could help clear up regulatory concerns.
David Lemke, chief financial officer at crypto wallet Giddy — and member of Utah’s Blockchain and Digital Innovation Task Force — and Utah Representative Trevor Lee both authored the bill before it was presented to the Utah State Legislature.
“Our goal was to create a regulatory framework that supports the growth and development of DAOs in Utah,” Lemke told Cointelegraph, adding, “The Act allows DAOs to become a legal entity, apply for a tax ID number, open a bank account, own property, deal with non-DAO businesses, run payroll, and exist in the ‘real’ world as opposed to on-chain only.”
Lemke and Lee sat down with Cointelegraph to talk about how the law came into effect and what they think it means for the future of the crypto industry in Utah.
So, what were the origins of the Utah DAO Act, and how did Lemke and Lee bring this legislation to life?
According to Lemke, there was a “need for a regulatory framework that supported the growth and development of DAOs” and that industry particapants wanted to set better standards and protections for DAOs and tokenholders.
The Utah DAO Act, per Lee, was the result of a long effort from the state’s Blockchain and Digital Innovation task force — which got its stamp of approval from the governor in May 2022 — to create a “regulatory framework that supports the growth and development of DAOs in Utah.”
Lemke said that the task force “was ground zero” for developing new language for the law. In addition to legislators, members also included local attorneys who consult with DAOs and “members of Web3 companies here in Utah who either are in DAOs or work closely with DAOs.”
Initially, the task force researched laws pertaining to DAOs from around the world and applied them to its first drafts of the Utah DAO Act. The task force started meeting regularly during the summer of 2022 to discuss and revise the bill internally.
By early this year, the bill had been ready to take to lawmakers at the committee level. “The law was discussed within the task force as a whole and as a subcommittee, with multiple revisions and tweaks made along the way,” Lemke said.
The final draft was further discussed among lawmakers in the state House and Senate and regulators from the Department of Financial Services and the Department of Taxation. Lee said:
“After rigorous discussions and revisions, the Utah DAO Act was ultimately passed with few concessions.”
The bill, which was signed by the governor on April 10, will give come into force in 2024, which will “give the government enough time to prepare for the certification requirements needed to prove that an entity is indeed a DAO,” Lemke said.
But no law gets passed without its fair share of obstacles and hurdles, be they political or technical.
According to Lee, one of the biggest challenges the task force faced was “educating lawmakers” about the underlying blockchain technology and how it enables DAOs to exist. He said that many lawmakers who had never dealt with blockchain technology before “felt uncomfortable” voting for or against it.
To better educate lawmakers, Lee and Lemke met with representatives and senators in committee meetings dedicated to the industry and explained the impact that DAOs could have on the state. They also met with the heads of various departments, such as finance and taxation, to address their concerns.
“Another obstacle was the issue of DAO anonymity,” Lee said. “Initially, lawmakers were not comfortable with giving an entity the blessing of a state organization without having any recourse whatsoever to determine who organized or founded it.”
They came to an agreement with the lawmakers, ensuring that the registrar would be known to the state, but the names of the founders would be redacted prior to publishing to protect their anonymity. Lee told Cointelegraph, “We were able to find common ground and address these concerns, ultimately resulting in successfully passing the Utah DAO Act.”
According to its authors, the new law has several benefits that it offers to decentralized autonomous organizations.
“The Utah DAO Act provides a new legal entity type for DAOs, called the Limited Liability DAO (LLD). With this entity type, organizers and tokenholders of DAOs are not personally liable for the acts of the business, just like an LLC or a corporation,” Lemke said.
He noted that this is “a significant improvement” from the current situation where tokenholders may be personally liable for the actions of the DAO, like with the recent court action against Ooki DAO.
Lee mentioned that the Utah DAO Act recognizes the importance of DAO-compliant anonymity and provides certain protections for organizers and operators of DAOs.
The law’s provisions for organizers and tokenholders to refrain from disclosing themselves allows DAOs to operate within the law without compromising individuals’ privacy. However, the law requires at least one individual organizer to be listed when they submit the bylaws of the DAO, but the organizer does not have to be a Utah resident or even a United States citizen.
“Before the DAO’s information gets published on the Utah Division of Corporations’ website, the state redacts all names and personal information related to the LLD,” Lee said. This compromise allows organizers and operators of DAOs to remain anonymous while also allowing the government to have some information about the entity.
The Utah DAO Act is further expected to have an impact on the tax treatment of DAOs. For example, if an unregistered DAO pays U.S. programmers to write code, it should file payroll tax returns and probably apportion some of its revenues to the United States.
Lemke said that any business that has income that is effectively connected with a U.S. trade or business has to file a tax return, regardless of whether the entity is legally organized in the United States.
Lemke clarified that the Utah DAO Act allows a DAO to organize itself as a legal entity, obtain a U.S. tax ID number, and file its tax returns. This will enable DAOs to operate legally and “avoid accruing massive tax liabilities.” The Utah DAO Act also gives DAOs the option to pick the type of entity that best suits their business plan, just like an LLC can elect its tax treatment.
Lee explained, “Essentially, the bill provides a way for DAOs to generate revenue for the state while protecting the DAOs from having an unlimited tax burden.”
Lee explained that the law can make the state more competitive for Web3 development. He said that most businesses organized in the U.S. select either their home state or Delaware, with its bipartisan political consensus to keep corporate law and statutes modern, stating, “Our goal as a task force was to make Utah become the Delaware of Web3 businesses, including DAOs.”
Lawmakers and task force members further hope that the law can attract DAOs from overseas. Lemke noted, “I’ve spoken with programmers from existing DAOs about the Utah DAO Act, and while they applaud the state for passing meaningful legislation that protects tokenholders and DAO organizers in a significant way, they hesitate to step foot in the United States legally (regardless of which state) because of the open attacks from the SEC and CFTC based on laws written almost 100 years ago.”
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Lee continued to state that most DAOs operate outside the U.S. due to regulatory uncertainty. “Team members on our task force include members that have helped structure these DAOs overseas. But we wanted to reduce the complexity of organizing DAOs and bring that business back into the United States, and this law draws upon the best DAO laws around the world,” he said.
Nevertheless, Lemkee said that “they’re encouraged by Utah’s DAO Act” because oftentimes, laws get passed at the Federal government level after enough states pass laws at the state level:
“Utah’s DAO Act is a glimmer of hope going in the face of Federal anti-crypto sentiment that may begin to turn the tide.”
The Utah State Legislature passed the Utah DAO Act, granting DAOs legal recognition and limited liability protections.
The Utah State Legislature passed Act HB 357, the Utah Decentralized Autonomous Organizations Act (Utah DAO Act).
This new law provides legal recognition and limited liability to DAOs, legally framing them as “Utah LLDs.“ The act resulted from combined efforts between the Digital Innovation Taskforce and the Utah Blockchain Legislature.
The Utah DAO Act was approved on March 1, 2023, after passing through the Senate and House committees. It defines ownership of DAOs and protects DAO-compliant anonymity through bylaws. Quality assurance DAO protocols are also introduced to ensure clear nuances in tax treatment and updated DAO functionalities.
Joni Pirovich, a blockchain and digital assets tax adviser who worked with the Digital Innovation Taskforce, tweeted:
“This is a huge step for DAO innovation as the Act is based on the @coalaglobal DAO Model Law, and will become effective from January 2024.”
The DAO law strives to allow utmost flexibility for innovation, recognizing that DAOs are transnational entities. It can provide technological guarantees equivalent to the protections that laws seek to protect through requiring manual reporting processes.
There were some significant concerns by the Utah Blockchain Legislature, and compromises were reached to pass the act. One concern was the anonymity and unaccountability of DAOs, which was addressed through a compromise requiring DAOs to divulge an incorporator while still maintaining anonymity.
Related: SEC accuses Utah firm of ‘fraudulent’ $18M crypto mining scheme
Additionally, the original tax language used was found by the Utah Blockchain Legislature to be incompatible with federal and state tax realities, so a compatible tax language was proposed by the Utah Tax Commissioner’s office.
Finally, there was a concern about the lack of ramp-up time for the Utah Division of Corporations to handle new applications. To address this concern, the implementation date of the bill was set for 2024, giving more time to adjust and edit practical implementations toward the bill.
The Republic of the Marshall Islands approved similar legislation last year, identifying DAOs as limited liability companies and ensuring formal DAO structure adoption in the state’s legal units.
Some of the primary duties assigned to the task force involve making policy recommendations related to blockchain and related technologies.
After nearly a three-year-long discussion about establishing a task force to oversee blockchain and crypto initiatives, the governor of Utah, Spencer Cox, signed a bill to create the Blockchain and Digital Innovation Task Force.
The Utah State Legislature first saw the introduction of the house bill (H.B. 335) in early February 2022, which took nearly two months to pass through several senate, house and fiscal actions before finally being signed by Governor Cox on 24th March.
Some of the primary duties assigned to the task force involve making policy recommendations related to blockchain and related technologies. A part of the bill reads:
“[The task force shall] develop and introduce recommendations regarding policy pertaining to the promotion in the state of the adoption of blockchain, financial technology, and digital innovation.”
According to the bill, the task force in Utah will consist of up to 20 members with diverse expertise in blockchain technology, cryptocurrency and financial technologies. Out of the lot, up to five members will be appointed by the president of the Senate, up to five members by the speaker of the House of Representatives and up to five members by the governor, among others.
In addition, the bill also requires the Utah Division of Finance to provide staff support to the task force. The policy recommendations also entail the development of non-financial incentives for industries in the state related to blockchain, financial technology, and digital innovation.
Upon establishment, the task force is required to report annually on or before November 30 to two committees of the Utah State Senate — the Business and Labor Interim Committee and the Legislative Management Committee.
Related: SEC doubles down on crypto regulation by expanding unit
As state and federal regulators explore the least disruptive scope of crypto adoption, the United States Securities and Exchange Commission (SEC) announced plans to double the number of personnel responsible for safeguarding investors in cryptocurrency markets.
As Cointelegraph reported, the SEC’s Cyber Unit, which includes the Crypto Assets and Cyber team, will hire 20 new people for 50 dedicated positions, including investigative staff attorneys, trial lawyers and fraud analysts.
SEC Chairperson Gary Gensler welcomed the move while highlighting the success of the Cyber Unit in bringing down fraudulent activities in the crypto space, stating:
“By nearly doubling the size of this key unit, the SEC will be better equipped to police wrongdoing in the crypto markets while continuing to identify disclosure and controls issues with respect to cybersecurity.”
The influencer marketer says prospective buyers can get 10% off the listing price of his house listing if payment is made in Dogecoin.
Crypto as a payment option for real estate continues to gain traction as the adoption of virtual currencies for both commercial transactions continues to take shape.
Scott Paul, the founder of Utah-based marketing agency Wooly, put up his Saratoga Springs home for sale with Dogecoin (DOGE) as an acceptable payment method, according to a report by Fox 13 on Sunday.
While the listing price is set at $399,000, Paul is reportedly ready to offer a 10% discount if the purchase is made via Dogecoin. Commenting on the potential volatility risk associated with a real estate deal conducted via DOGE, Paul remarked: "I’m a very risky person. I think the chances of me selling it in Dogecoin and having it go up by 20%, 30% or 40% is more likely.”
Given the current price of Dogecoin, Paul’s house listing at a 10% discount will amount to 1,734,782.60 DOGE. The eight-ranked crypto is down 72% from its May all-time high as of the time of writing.
The Wooly founder’s background in brand recognition and viral marketing also offers a likely explanation for the decision to accept Dogecoin as a payment option. DOGE is arguably the largest viral meme coin in the crypto space, with its price growth often fueled by the same techniques ubiquitous in the influencer marketing arena.
Related: Law professor calls for crypto mining regulation during US Senate hearing
For Paul, the decision to accept Dogecoin for his house is also part of a longstanding interest in cryptocurrencies dating back to 2015. Paul told Fox 13 that he was an early adopter of Bitcoin (BTC) and Ether (ETH).
As previously reported by Cointelegraph, Bitcoin payments for real estate are on the rise. In June, E11EVEN Hotel and Residences, a Miami-based luxury condo developer announced the receipt of its first crypto deposit for property purchases.
