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S.Korea’s Crypto ETF Ban Reevaluation: 61% Trade Volume Surge Red Flags

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  • South Korea’s FSC plans to reevaluate its ban on local spot cryptocurrency ETFs and institutional accounts, signaling a shift in regulatory stance.
  • The approval of spot bitcoin ETFs in the U.S. has pressured the FSC to consider local listings, reflecting a potential policy change.
  • Upbit dominates the market, handling 61% of trade volume, raising concerns about its influence on partner K-bank and implications for its IPO plans.

South Korea’s Financial Services Commission (FSC) has announced a significant shift in its approach to cryptocurrency regulation. The FSC stated that it would reevaluate the ban on local spot cryptocurrency exchange-traded funds (ETFs) and institutional accounts on crypto exchanges. This decision comes as part of a broader discussion on digital asset policies through its newly formed cryptocurrency committee.

Historically, the FSC has maintained a strict stance against digital asset exposure within traditional financial markets. However, the regulator’s recent report for the annual audit reveals a willingness to reconsider its previous decisions. This marks a notable departure from its past opposition to cryptocurrencies.

The potential for change has been heightened by the approval of spot bitcoin ETFs in the United States earlier this year. The success of these financial products has led to increasing pressure on South Korean regulators to adapt. While the FSC has reaffirmed its commitment to the existing ban, there is now an indication of a more open-minded approach to local crypto ETF listings.

Investigating Monopolistic Structures of Crypto Exchanges

In addition to reviewing ETFs and institutional accounts, FSC chair Kim Byung-hwan has announced plans to investigate the monopolistic structure of South Korea’s digital asset exchanges. Upbit’s dominance has raised concerns among regulators and lawmakers alike. Kim’s comments were spurred by Democratic Party lawmaker Lee Kang-il, who highlighted the financial relationship between Upbit and its partner, K-bank.

K-bank, a key player in South Korea’s digital banking sector, has become increasingly reliant on Upbit. Lee pointed out that Upbit deposits constitute 20% of K-bank’s total deposits, raising alarm over the potential risks if their partnership were to falter. This reliance could pose a significant threat to K-bank’s upcoming initial public offering (IPO) plans, as the stability of the neo bank hinges on its relationship with Upbit.

As South Korea’s financial watchdog reevaluates its position on cryptocurrency regulation, the potential approval of local spot ETFs could reshape the digital asset landscape in the country. With pressure mounting from lawmakers and market participants, the FSC’s forthcoming decisions will be crucial in determining the future of cryptocurrency trading and investment in South Korea. The implications of these changes could extend far beyond the local market, influencing global digital asset trends and investor sentiment.

S.Korea’s Cryptocurrency Tax Delays Open Opportunities for Threats: 2028 Target Date Eyed

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In the world of cryptocurrency, delays in taxation have put the entire system at risk. Originally set for October 2021, the tax law passed during the Moon Jae-in administration was first postponed to January 2023, then again to January 2025 under Yoon Seok-yeol. Concerns over investor burden and market confusion were the reasons given each time.

If the ruling party postpones it again, the tax on cryptocurrency income will be delayed for over six years. Critics argue that public opinion heavily influences tax policy. The Financial Services Commission reported that by the end of last year, domestic cryptocurrency investors numbered 6.45 million. People in their 30s and 40s make up more than half of this group, holding significant sway over public opinion. This demographic’s influence is why politicians are paying close attention to cryptocurrency investors.

Dissatisfaction with cryptocurrency taxation has grown with recent drops in Bitcoin and other cryptocurrencies. An insider noted that the daily trading volume on domestic exchanges fell from 20 trillion won in March to 2 trillion won recently. Imposing the tax next year might drive away investors and further reduce trading.

Meanwhile, the financial investment income tax, scheduled for early next year, is under review. The government may abolish it, but former Democratic Party leader Lee Jae-myung suggested rethinking its timing. If cryptocurrency taxation proceeds while the financial investment tax is delayed, investors will feel relatively deprived.

Need for Cryptocurrency Regulation

Critics argue that full-scale taxation is tough due to insufficient systems and institutional preparation. A government official mentioned the need for secondary legislation to classify cryptocurrencies and detail business types for easy tax implementation. Yet, others counter this claim, pointing out that after two delays and three years of preparation, the excuse of “lack of preparation” is weak.

There are concerns that postponing the tax again, due to public opinion and market conditions, might lead to its eventual collapse. If postponed until January 2028, a general election in April that year could lead to another delay.

The principle of “where there is income, there is tax” is being undermined by repeated delays. Some argue that early next year, before the 2026 local elections, is the right time to implement the tax. The government will announce its tax law revision bill at the end of this month. Deputy Prime Minister Choi Sang-mok stated that they are reviewing the matter. The Democratic Party will clarify its stance after the government’s announcement.

South Korea’s Bold Crypto Guidelines for NFTs Revealed

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In a significant move to provide regulatory clarity in the fast-evolving crypto and digital asset space, South Korea’s Financial Services Commission (FSC) has announced new guidelines for regulating non-fungible tokens (NFTs). According to Yonhap news agency, the FSC will start treating certain mass-produced NFTs as cryptocurrencies under specific conditions.

The FSC’s new guidelines come as a response to the growing complexity and diversity within the NFT market. Traditionally, NFTs have been celebrated for their unique qualities, distinguishing them from cryptocurrencies. However, the FSC’s latest framework indicates that this distinction may blur if NFTs are mass-produced and exchangeable. In such cases, these NFTs could be subjected to the same regulatory scrutiny as traditional cryptocurrencies.

Crypto Compliance: FSC’s NFT Guidelines

Under the new regulations, the FSC will classify an NFT as a cryptocurrency if it loses its uniqueness and becomes fairly exchangeable or capable of being fractionalized. Additionally, if an NFT can be used for payments for goods and services, it would also fall under this category. This nuanced approach aims to ensure that NFTs used in a manner similar to cryptocurrencies are regulated appropriately.

Conversely, NFTs that remain unique and have limited economic value will retain their traditional classification. For example, digital tokens that serve as proof of transaction or concert tickets will continue to be treated as regular NFTs. This distinction ensures that the essence of what makes NFTs unique is preserved while providing a framework for those that function more like cryptocurrencies.

An FSC spokesperson emphasized that the classification of NFTs would be determined on a case-by-case basis, rather than applying a one-size-fits-all standard. This flexible approach allows the FSC to adapt to the rapidly changing digital asset landscape, ensuring that each NFT’s specific characteristics are considered.

Furthermore, the FSC’s guidelines suggest that NFTs could be classified as financial securities if they meet criteria outlined in South Korea’s Capital Markets Act. This addition further broadens the scope of how NFTs can be regulated, ensuring comprehensive oversight.

In summary, the FSC’s new guidelines represent a significant step towards regulating the burgeoning NFT market in South Korea. By potentially classifying certain NFTs as cryptocurrencies, the FSC aims to balance innovation with investor protection, providing much-needed clarity in a complex and dynamic industry.

South Korea’s Bitcoin ETF Debate Heats Up Amidst Election Fever

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As a nation with an active cryptocurre­ncy market, South Korea finds itself navigating policy de­cisions surrounding Bitcoin exchange-traded funds (ETFs) amidst upcoming parliame­ntary elections on April 9th, 2024. The two major political partie­s present diverge­nt stances, vying for voter support.

The ruling Pe­ople Power Party, led by Pre­sident Yoon Suk Yeol, has pledge­d to postpone the impleme­ntation of a digital asset tax. This move aims to provide room for the eme­rging industry and encourage further participation, re­sonating with crypto investors.

On the other hand, the­ opposition Democratic Party has adopted a progressive­ approach, promising to ease restrictions on ETFs, including those­ linked to US Bitcoin products. “We’re going to allow the­ ETFs, whether domestic or ove­rseas,” declared Hwanse­ok Choi, a policy specialist, aligning with the party’s manifesto. This stance­ resonates with over 6 million South Kore­ans actively participating in the crypto market through re­gistered exchange­s in 2023.

South Korea’s Bitcoin ETF Dilemma

South Korea’s regulatory stance on cryptocurre­ncies, particularly Bitcoin ETFs, has been cautious. This contrasts with the­ recent US approval of similar ETFs, which have amasse­d $57 billion in assets. The Korean Se­curities Commission’s opposition to these instrume­nts has created uncertainty, impacting dome­stic stocks.

South Korea’s gove­rning party proposes delaying the imple­mentation of crypto taxes, addressing inve­stor concerns about profitability. Analysts like Yumin Kim, an alternative­ asset expert at Hanwha Inve­stment & Securities Co., be­lieve that the e­ventual approval of Bitcoin ETFs would solidify the crypto market as a mainstre­am investment avenue­ in the country.

Balancing Innovation with Investor Protection

While­ South Korea actively participated in the­ recent crypto bull run, regulatory conce­rns persist. The dramatic collapse of Do Kwon’s Luna and Te­rraUSD tokens in 2022 serves as a stark re­minder of the risks inhere­nt to the market. Howeve­r, the current surge, with a total marke­t capitalization exceeding $900 billion this ye­ar, demonstrates the industry’s re­silience.

Both major political parties re­cognize the nee­d for robust investor protection measure­s and advocate for comprehensive­ regulations for the crypto industry. This suggests a pote­ntial shift towards a more accepting stance on digital asse­ts in South Korea, aligning with broader trends across Asia. Howe­ver, this path may diverge from the­ skepticism expresse­d by certain US officials.

The upcoming ele­ction will be a crucial turning point for South Korea’s cryptocurrency landscape­. The chosen party’s approach to Bitcoin ETFs and regulations will significantly impact inve­stor sentiment and the ove­rall trajectory of the industry in the nation.

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Crypto.com Dominates South Korea with Explosive Launch on April 29

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Crypto.com, a leading global digital asset exchange, is expanding its reach into the South Korean market with the launch of its retail trading services on April 29th. This move comes as the company aims to capitalize on the growing interest in digital assets within the region.

The announcement follows the exchange’s acquisition of OK-BIT, a locally licensed crypto exchange, back in 2022. With OK-BIT winding down its operations, Crypto.com is stepping in to fill the void, positioning itself as a key player in South Korea’s burgeoning digital asset landscape.

Source: Crypto.com

Eric Anziani, president and chief operating officer of the exchange, expressed enthusiasm about the launch, emphasizing the significance of the South Korean market for the company’s growth. He noted the high level of consumer interest in digital assets within the region, making it an ideal target for expansion.

However, operating in South Korea comes with its challenges, particularly regarding regulatory compliance. The local authorities have implemented strict regulations for digital asset exchanges to mitigate risks such as money laundering and market manipulation. As a result, the exchange’s Korean platform, known as the Crypto.com App, will adhere to these regulations, catering exclusively to retail investors and excluding institutional clients.

Crypto Integration in Korean Exchanges

One of the key requirements for exchanges in South Korea is to establish a partnership with a local bank to facilitate fiat-to-crypto trading. While the famous Korean exchange’s services will initially focus on digital asset trading, the company is committed to securing a bank partnership to offer a full trading experience to its users.

The decision to enter the South Korean market underscores the exchange’s commitment to global expansion and its recognition of the region’s potential as a major digital asset hub. By providing a user-friendly platform that complies with local regulations, the exchange aims to cater to the evolving needs of South Korean investors while contributing to the broader adoption of digital assets.

As the launch date approaches, all eyes will be on Crypto.com as it seeks to establish itself as a trusted and reliable player in South Korea’s dynamic digital asset world.

South Korea Plans Crypto Management System Combat Tax Evasion

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South Korea’s National Tax Service (NTS) is taking a firm stance against crypto tax evasion with the development of a “virtual asset integrated management system.” This system, currently in its preliminary consulting phase, aims at effectively analyzing and managing the information collected from mandatory virtual asset transaction reports.

The move comes amidst a resurgent crypto market, with Bitcoin reaching new highs of $71,231 on March 11, 2024. This renewed interest, coupled with the growing presence of virtual assets in institutional settings, has highlighted the need for robust taxation and anti-money laundering (AML) measures.

While the crypto business operators were required to report the details of any transactions to the Corporate and Income Tax Acts, there was a loophole in the absence of relevant analysis and management mechanisms. The new integrated system aims to plug this hole and ensure ‘fair taxation,’ preventing attempts that exploit the anonymity and decentralization of virtual currencies.

Global Push for Stricter Crypto Regulations

South Korea’s initiative aligns with the global trend of harder digital assets regulations. European Union (EU) actively makes market regulations, and the USA imposed new tax reporting requirements for virtual assets. Most of these regulations are recommended by the Financial Action Task Force (FATF), which is an intergovernmental organization focusing on anti-money laundering and terrorist financing activities.

PwC recently reported that global cryptocurrency rules are guided by what the FATF proposed, while the most extensive regulations for virtual asset businesses are being put into place in the world. These rules help maintain transparency and order in financial markets, prevent crime, and protect investors.

The possibility of the virtual asset management system is much more than simply raising tax revenue. By improving the transparency of crypto transactions, it fosters greater legitimacy that would draw more institutional investors to the cryptocurrency industry. It could even have an impact on whether South Koreans choose to stay in crypto for the long haul.

However, there are still some worries about the possibility of overreach that could stifle innovation. Finding the right regulatory middle-ground and encouraging the creation of a vibrant crypto culture in South Korea will be critical to its future success.

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Bitcoin Surge Fever: Kimchi Premium Peaks to 10.32%, Outpaces Global Rates

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The Kimchi Premium for Bitcoin soared to a 27-month peak of 10.32% in South Korea, outstripping rates in other markets, as per data. This term, Kimchi Premium, encapsulates the price variation between crypto assets in South Korea and elsewhere, particularly against the USD market.

South Korea’s crypto market bears distinct traits shaping this discrepancy. Regulatory barriers impede foreign investors from engaging in South Korean exchanges. Moreover, the Foreign Exchange Transactions Act discourages Korean investors from large-scale arbitrage activities across international platforms.

Consequently, the limited local crypto supply amplifies domestic demand, fostering a wider price disparity. The swelling Kimchi Premium reflects heightened purchasing fervor among South Korea’s retail investors, per findings from CryptoQuant.

This surge in premium underscores the robust appetite for bitcoin within South Korea, indicative of its evolving role in the country’s investment landscape. As the crypto market continues to mature globally, the dynamics of local regulations and demand-supply imbalances in regions like South Korea will continue to influence Bitcoin’s pricing dynamics on a broader scale.

Factors Impacting Bitcoin’s Market

In perspective, renowned trader John Bollinger recently voiced concerns over Bitcoin’s sharp price decline, sparking widespread attention. Known for his astute market analysis, Bollinger suggests the current downturn may signal deeper issues, as reported by TWJ.

Traditionally, minor sell-offs are part of Bitcoin’s market behavior, but this substantial drop raises questions. Bollinger speculates on factors like leveraged trading and inexperienced investors impacting the market.

In a day of extreme volatility, Bitcoin surged to a record $69,000 before plunging 14% to $59,005. Yet, BTC’s resilience shines as it rebounds to $66,200, reclaiming over half its losses.

Amid this turbulence, Bollinger’s cautionary stance echoes the unpredictable nature of cryptocurrencies. While BTC faces challenges, it also exhibits remarkable resilience. Investors heed Bollinger’s wisdom, navigating the volatile market with caution and strategic foresight. In the ever-shifting landscape of digital assets, vigilance remains paramount, reminding investors of the inherent risks and rewards of BTC investment.

Ripple(XRP) Ownership Booms in Korea: Ripple Partner Unveils Impressive Statistics

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Back in July 2023, Ripple took notice of South Korea and looked to boost XRPL adoption. The company behind XRP, the virtual currency, and the XRP ledger is working with a domestic research institution to expand its footprint in South Korea. With the partial settlement of its protracted legal battle with the SEC, Ripple is still dedicated to growing its business and offering its services in new regions.

The most recent tactical maneuver made by Ripple is in South Korea. The company declared that it is collaborating with Seoul-based Catalyze Research to raise awareness of XRP Ledger (XRPL). Vice president at Ripple Markus Infanger praised South Korea’s developers and called the nation a “dynamic market”.

“South Korea has emerged as a vibrant hub for blockchain and Web3 technology, with a strong developer community that has showcased remarkable innovation and expertise,” Infanger said in a statement.

Compared to other countries, South Korea has seen a number of high XRP trading volume transactions. Ripple disputed that those quantities were the reason for the agreement. Apart from bitcoin (BTC), XRP was the most traded cryptocurrency on South Korean cryptocurrency exchanges from January to May. Trading volumes for XRP, which came to $24.5 billion during that time, almost tripled those for ether (ETH), which was trading at about $9 billion.

Ripple Partner Unveils Impressive Statistics

The cryptocurrency community is well aware that South Korea accounts for a sizable portion of XRP investors. By trading volume, XRP is undoubtedly one of the biggest cryptocurrencies in South Korea and the second most valuable asset on Bithumb, one of the most well-known exchanges in the nation.
Josh Kim, a Ripple partner spearheading the XRP Ledger’s development in South Korea, provided more details on the country’s XRP adoption in an upcoming interview with Crypto Eri.

To be more precise, he mentioned that five million people in South Korea, or around 10% of the nation’s total population, own more XRP than any other cryptocurrency.

He also cited previous studies conducted by government organizations that show at least 15% of the XRP in circulation is owned by South Koreans. Josh Kim believes the nation will maintain its position as a leader in the adoption of XRP and XRP Ledger in spite of regulatory obstacles.

Crypto Tax Delay, People Power Party Proposes Two-Year Extension: Report

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The ruling party of South Korea, the People’s Power Party, is leading a campaign to extend the tax on the gains made in cryptocurrency for two more years as it promised during its campaigns before the general election this April. Herald Business Daily reported that the party wants to push forward digital currency asset taxation as part of its election agenda while preparing a stable tax system by the 22nd National Assembly.

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Rationale and Framework for Crypto Taxation

This comes in response to the previous postponement of online assets impositions by the government and the National Assembly until 2025 January but there are now plans to continue this deferment further. People Power Party argues that there should only be taxing after constructing strong taxation infrastructure for crypto assets and has stressed on ‘’taxation after selection fee” principle.

The People Power Party is considering the possibility of delaying virtual asset taxation in an attempt to draw parallels with the tax overhaul made by the Yoon Seok-yeol government regarding financial investment and stock transfer taxes. A key part of this proposal is the plan for the second stage of the “Virtual Asset User Protection Act,” which will seek to outline what constitutes a deposit management business, establish a legal listing regime, as well as create a virtual asset exchange.

Whereas the first phase of the Virtual Asset User Protection Act was mainly focused on investor protection and penalties; PPP intends to extend it with regulatory oversight and imposition of levies. One party official emphasized a full-fledged taxation regime before taxing digital property on different grounds like transaction monitoring and discrepancies in income reporting.

However, the party is confident that it can implement its proposed tax deferral strategy despite recognizing the government’s past oversight of the crypto asset market. Nevertheless, the report suggests that there isn’t an intention to abolish taxation on virtual assets. The party thinks it would be unfair to ignore taxes payable on income from virtual assets.

Moreover, there are also talks happening about changing the tax base, especially regarding the difference between taxation exemptions on shares and virtual assets. Tax policies should be balanced according to the People Power Party and the whole taxation process made comprehensive to handle intricacies in crypto asset operations.

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South Korea Cracks Down On Crypto Crimes With Harsh Penalties

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South Korea is preparing to enforce a new law that will protect crypto asset users from market manipulation, illegal trading, and information abuse, according to the local media. The law, which will take effect on July 19, 2024, will impose heavy fines and prison sentences for offenders, including life imprisonment for those who make more than 5 billion won from crypto-related crimes.

The law, officially known as the Virtual Asset User Protection Act, was passed by the National Assembly in July 2023, with a one-year grace period. The Financial Services Commission (FSC), the country’s top financial regulator, announced on Wednesday that it had completed the preliminary legislative notice on the enforcement decree and supervisory regulations of the law.

The FSC said that the law aims to address various concerns within the virtual asset landscape, especially the prohibition of market manipulation, illegal trading practices, and the misuse of undisclosed material information related to virtual assets. The FSC also said that it is setting up infrastructure for supervisory, inspection, and investigation tasks as stated in the law.

Severe Penalties For Violators

According to the law, offenders who violate the regulations will face criminal prosecution, including imprisonment for a minimum of one year, or fines ranging from three to five times the amount of illegal profits. In cases where unfair profits exceed 5 billion won, perpetrators may face a maximum sentence of life imprisonment, coupled with fines equivalent to twice the amount of unfair gains.

The law also stipulates that virtual asset business operators, such as exchanges, must adhere to stringent regulatory directives issued by financial authorities. For example, they must ensure the secure management of user deposits held in banks for virtual asset transactions, and securely store over 80% of users’ virtual assets’ economic value in offline storage, distinct from internet-connected systems, to mitigate risks like hacking or system failures.

Additionally, they must either acquire insurance coverage or set aside reserves equivalent to over 5% of the total economic value of virtual assets, excluding those stored offline. These measures will mitigate potential losses and safeguard users’ assets in unforeseen circumstances.

A Crypto Hub With Consumer Protection

South Korea is one of the leading countries in the world in terms of crypto adoption and innovation. However, it has also witnessed several cases of fraud and scams involving virtual assets. For instance, the CEO of Bitsonic, a former major crypto exchange, was sentenced to seven years in prison for his involvement in a $10 million fraudulent scheme that involved inflating the trading volume and price of Bitsonic Coin, the exchange’s native token.

The FSC said that the new law will help prevent such incidents and enhance consumer protection within the virtual asset realm. The FSC also said that it will oversee compliance with the law, conducting routine inspections of virtual asset business operators to ensure adherence to regulations.

By introducing stricter regulations and penalties for crypto crimes, South Korea aims to become a crypto hub that balances innovation and consumer protection. The law is expected to boost the credibility and transparency of the virtual asset industry, as well as the trust and confidence of the users.

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