IRS Grants Temporary Tax Relief for CEX Users in 2025The IRS has introduced a temporary relief measure for cryptocurrency holders using centralized exchanges (CeFi) from January 1 to December 31, 2025. This new measure allows taxpayers to select specific asset units for tax purposes, moving away from the previous First-In, First-Out (FIFO) accounting method, which often resulted in higher capital gains taxes, especially in bullish market conditions. The relief was prompted by concerns that most CeFi brokers were unprepared to support Specific Identification (Spec ID) accounting. Under FIFO, taxpayers would be forced to sell their oldest assets first, typically incurring greater tax liabilities due to the lower cost basis of these assets. With the new regulation, taxpayers can utilize their records or crypto tax software to accurately document which specific units they are selling, mitigating potential financial drawbacks. It’s crucial to note that after 2025, taxpayers must choose an accounting method with their broker, or FIFO will be the default. This announcement follows the IRS's recent guidelines urging DeFi brokers to collect and report comprehensive information about transactions, reflecting ongoing efforts to combat crypto tax evasion and enhance compliance in the evolving digital asset landscape. MiCA Regulation Takes EffectThe implementation of the EU's Markets in Crypto-Assets (MiCA) regulation on December 30, 2024, marks a pivotal moment for cryptocurrency oversight in Europe, yet concerns linger, particularly regarding Tether's USDT stablecoin, which lacks MiCA compliance certification. As of the publication, USDT's market cap has declined from over $141 billion to approximately $138 billion within ten days. MiCA enforces strict reserve and liquidity requirements, mandating that larger stablecoin issuers like Tether must hold at least 60% of their reserves in low-risk EU banks, a requirement that poses economic challenges. However, Tether’s significant market presence and cash reserves mitigate immediate risks, with earnings projected at $10 billion for the year. Some exchanges, including Coinbase Europe, have delisted USDT to comply with MiCA, while others like Binance await regulatory clarity. Analysts predict MiCA could lead to market consolidation, driving smaller firms out of the EU due to increased compliance costs, while jurisdictions outside the EU may benefit. China Tightens Crypto Oversight with New Forex Regulations on BanksChina has recently implemented new foreign exchange rules that compel banks to rigorously monitor and report on risky trades involving cryptocurrencies. These regulations, effective from December 31, 2024, are aimed at curbing cross-border gambling, underground banking, and illegal financial activities using crypto assets. Banks must track the identities of individuals and institutions involved in transactions, the sources of their funds, and the frequency of their trades, complicating efforts to bypass China’s stringent foreign exchange policies and reinforcing the country’s long-standing anti-crypto stance since it banned crypto transactions in 2019 to reduce energy consumption and environmental impact from mining. Despite this ban, China possesses significant Bitcoin holdings, reported at 194,000 BTC, valued at approximately $18 billion, making it the second-largest holder of Bitcoin globally. These assets were acquired through asset seizures rather than market purchases, underscoring a complex relationship with digital assets. Former Binance CEO Changpeng Zhao noted the possibility of China adopting a Bitcoin reserve strategy, suggesting that the government might pivot its policies if circumstances change, emphasizing a potential future shift despite current stringent regulations. Switzerland Approves "Bitcoin Initiative" to Include Bitcoin in National ReservesSwitzerland's Federal Chancellery has approved the “Bitcoin Initiative,” a proposed constitutional amendment requiring the Swiss National Bank (SNB) to hold a portion of its reserves in Bitcoin (BTC), alongside gold. Formally titled “For a Financially Strong, Sovereign, and Responsible Switzerland,” the initiative was filed on December 5, 2024, and is supported by prominent Bitcoin advocates and financial reformers. It aims to amend Article 99 of the Swiss Constitution, asserting that Bitcoin's decentralized and deflationary attributes could enhance Switzerland’s financial resilience and sovereignty. The initiative must collect 100,000 valid signatures from Switzerland's approximately 8.92 million residents by June 30, 2026, to trigger a nationwide referendum. While the initiative has met all legal requirements, its passage into law remains uncertain as it requires further review by the Federal Assembly. Proponents argue that it aligns with Switzerland's financial innovation tradition, yet critics express concern over Bitcoin's volatility and potential risks to the stability of the Swiss financial system. If successful, the amendment could position Switzerland as a pioneer in constitutionally integrating cryptocurrencies into national monetary policy, potentially influencing global central bank strategies regarding digital assets. Singapore Solidifies Its Position as Asia's Crypto Hub with Doubling of Licenses in 2024Singapore is rapidly establishing itself as a leading crypto hub in Asia, enhancing its appeal through a risk-adjusted regulatory framework that fosters innovation while protecting investors. In 2024, the Monetary Authority of Singapore (MAS) significantly increased its issuance of Major Payment Institution (MPI) licenses for crypto exchanges, granting a total of 13 licenses—more than double the number issued in 2023, which included major players like Blockchain.com and Coinbase. This proactive licensing approach not only supports the emerging digital finance landscape but also positions Singapore as a global leader in blockchain technology, boasting an impressive portfolio of 1,600 blockchain patents, 2,433 industry-related jobs, and 81 crypto exchanges, all notable achievements for a nation with a population of under 6 million. In comparison, Hong Kong, Singapore's closest competitor, has only seven fully licensed crypto exchanges, highlighting the regulatory disparity. This robust environment for crypto firms, coupled with ease of interaction with local banking partners, further underscores Singapore's commitment to nurturing a thriving ecosystem for Web3 companies. Overall, these developments signal Singapore’s ascent as a pivotal player in the cryptocurrency arena. Syria Considers Bitcoin Legalization and Currency Digitization to Revive EconomySyria's transitional government is exploring the legalization of Bitcoin and the digitization of the Syrian pound as a strategy to stabilize its war-torn economy and attract global investments. Proposed by the Syrian Center for Economic Research (SCER), the plan aims to leverage cryptocurrency adoption to rebuild following the significant economic decline of over 60% since 2010 and rampant inflation that has undermined public trust in banking. It envisions Bitcoin as an essential tool for financial revival, including trading and mining, using blockchain to stabilize the national currency by backing it with assets such as gold and US dollars. The initiative additionally proposes utilizing Syria's untapped energy resources for Bitcoin mining while ensuring environmental sustainability. Legalizing Bitcoin could foster international investments, simplify remittances, and enhance privacy through self-custody of digital assets. While the proposal suggests significant advantages, including potential sanctions mitigation, it faces substantial challenges such as building necessary infrastructure, regulatory hurdles, and geopolitical scrutiny. Observing international trends, Syria's approach aligns with nations like El Salvador, Russia, and Iran, which have utilized cryptocurrency to navigate economic obstacles. Ultimately, the SCER's ambitious proposal seeks to transform Syria’s financial landscape, offering opportunities for recovery and growth. UK Faces Crypto Advertising Challenges as FCA Intensifies Regulatory Efforts and Legal ActionsThe United Kingdom is facing significant challenges in regulating cryptocurrency advertising, as reported on January 1, 2025. The Financial Conduct Authority (FCA) issued 1,702 alerts regarding potentially misleading crypto ads from October 2023 to October 2024, but only 54% of these alerts led to content removal. The FCA is particularly focused on social media influencers promoting risky financial schemes, with nine individuals, including reality TV stars, facing criminal charges while investigations continue for 20 others. Former FCA chair Charles Randell has emphasized the need for more vigorous enforcement, including actions against tech platforms and crypto exchanges, to curb non-compliance. The FCA’s regulations aim to protect investors by requiring clear warnings about investment risks and prohibiting referral bonuses. As the UK prepares to launch a robust regulatory framework in early 2025, it will address oversight challenges in stablecoins, staking, and digital asset services. The FCA has initiated public consultations to refine these regulations, targeting issues like market manipulation and financial fraud. Industry experts highlight the importance of these regulatory steps for the UK's competitiveness in the evolving crypto landscape, cautioning that failure to act decisively could result in the UK lagging behind global peers like the United States.This article has been refined and enhanced by ChatGPT.