Korea’s National Assembly Suggests Delaying Income Tax Rule on Crypto Assets to Jan 2022

South Korean lawmakers have allegedly proposed to delay the upcoming income tax rule on crypto-assets by three months from its scheduled commencement date in October 2021. According to the Dong-a Ilbo, a South Korean media which first reported this news, the law might come into effect later in January 2022.

The report notes that South Korea’s National Assembly, led by its planning and finance committee, recently tabled a report to suggest this law’s delay. This is because local crypto exchanges have asked for more time to develop proper tax infrastructures to meet the reporting requirements.

Through the Ministry of Economic and Finance, South Korea’s government made amendments to its tax code back in July. The new framework, which is yet to be approved by the National Assembly, proposed a 20% capital gains tax on crypto trading activity for income above 2.5 million Won ($2000).

As earlier reported by BEG, the suggested South Korea tax code details how transacting parties will annually report their taxes. It outlines that tax payments associated with crypto assets will be paid in May, per the ‘Taxation on Virtual Asset Transaction Income’ section on the new tax code.

Notably, the proposed tax on virtual assets is applied to both residents and non-residents that leverage South Korea-based crypto exchanges for their digital asset activity. With the commencement dates pushed back, the planning and finance committee is expected to update in the coming days.

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Author: Edwin Munyui

US Regulator OCC Proposes ‘Fair Access’ to Banking Services For All Including Crypto Companies

The Office of the Comptroller of the Currency (OCC), the US’s national bank regulator, has proposed a rule that would forbid banks from providing their services to legal industries, including cryptocurrency companies.

As per the proposed rule, led by former Coinbase counsel Brian Brooks, fair access is promoted under which financial services could be denied by banks to customers only on the basis of “quantitative, risk-based standards established in advance.”

They can’t do so due to political pressures, to prevent the customer from entering or competing in a market or to benefit another person or business activity.

Published on Friday, the proposal does not explicitly mention cryptocurrency but is surely welcoming news for the industry, which has been time and again denied the services by the banks.

The proposal does mention Operation Choke Point, an initiative taken by the Justice Department under the Barack Obama presidency that reportedly aimed to shut down the fraudulent businesses and lenders.

It further reads that it has been revealed that the government agencies have pressured banks to sever their financial services access to “disfavored (but not unlawful) sectors of the economy.”

But neither OCC nor banks are well-equipped to balance these risks that are unrelated to the financial exposure, it said.

Marco Santori on US OCC
Source: @MSantoriESQ

“Fair access to financial services, credit, and capital are essential to our economy,” said Acting Comptroller of the Currency Brian P. Brooks.

“This proposed rule would ensure that banks meet their responsibility to provide their services fairly since they enjoy special privilege and powers because if the system fails to provide fairness to all, it cannot be a source of strength for any.”

The proposal is open for public comments until January 4, 2021.

This week, President Donald Trump nominated the acting Comptroller Brooks as the permanent head of the OCC, a five-year stint.

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Author: AnTy

Intercom Founder ‘Firmly’ Jumps on the Bitcoin Bandwagon; But BTC Is Not A ‘Fit’ for the Company

Bitcoin continues to rule the market and attract the masses.

The latest one is Eoghan McCabe, the Chairman, and co-founder of the software company Intercom.

McCabe took to Twitter to share that he has finally taken a deep dive into the world of Bitcoin.

“I would like to announce that after years of dabbling I’ve jumped firmly onto the Bitcoin wagon and would now like everyone else to do the same,” he wrote on Twitter, adding, “Please hodl.”

While his non-twitter friends kept on pushing him to get into BTC, this is the time he thinks when the leading digital currency goes mainstream.

“I just kept seeing and hearing anecdotes of its use as a currency and store of value, and then recent institutional engagement started to make me feel like it was going mainstream,” he explained the reason behind his strong shift to BTC.

McCabe further shared that it was Morgan Creek Digital co-founder Anthony Pomliano’s podcast with Robert Breedlove, the founder, and CEO of Parallax Digital, that a “cryptolaggard” like him found “compelling.”

Breedlove actually wrote an open letter to the founder of the world’s biggest hedge fund Ray Dalio, who, although he agrees with Bitcoiners assessment on the macroeconomy, is missing the importance and ultimate success of Bitcoin.

In a recent interview, Dalio said one of the points not working in bitcoin’s favor is that the government would outlaw it, which Twitter CEO and BTC proponent Jack Dorsey doesn’t agree with.

While McCabe has found love for Bitcoin, his company isn’t ready to take that step yet. As one crypto enthusiast called him out to now convert the company’s cash balance into Bitcoin, a move first started by MicroStrategy and then Square, McCabe replied with “baby steps.”

As for Intercom to start accepting BTC, “Bitcoin is not a fit for us just yet,” he said.

“Unfortunately, the laws of physics of big companies state that there are years between the point a founder thinks something is a good idea and his company acts on said idea,” he added.

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Author: AnTy

South Korea to Implement 20% Income Tax on Crypto Gains After Finalizing on New Tax Code

South Korea’s government has tabled its final proposed tax code on cryptocurrencies with the tax rule set to be implemented from October 2020. The new tax rule will see a 20% income tax on crypto gains take effect as South Korea’s government scales its effort to capture digital asset revenue.

The final documentation was agreed upon by South Korea’s Ministry of Economy and Finance, which met on July 22. It has since published the revised tax code paying attention to digital assets in a section dubbed ‘Taxation on Virtual Asset Transaction Income.’ Notably, crypto transactions within South Korea’s financial ecosystem were not subjected to any taxes prior to this development.

South Korea’s Crypto Tax Code

According to the authorities, a movement towards taxation was inevitable, given some jurisdictions like Singapore have already made progress in this area. Consequently, South Korea is now catching up after an increase in the use of Bitcoin and other crypto-assets for business activity. With the new tax code in play, gains made from crypto will be categorized as taxable income, obliging the associated parties to report annually.

The framework stipulates that income above 2.5 million Won annually ($2,000) is subject to the outlined tax, while anything below will not be taxed. It goes on to provide guidelines on how to report the crypto trading activity with the payment month set for May. It is also quite noteworthy that this new tax code will apply for both residents and non-residents operating on South Korea domiciled crypto exchanges.

This work has been in progress for over six months, and a final proposal comes as a relief to stakeholders such as courts who had been waiting for better clarity on crypto taxation. A recent judgment had echoed these sentiments, pointing out the need for income tax classification on crypto assets,

“Until now, virtual assets have been recognized only as a function of currency and have not been subject to income tax, but recently, virtual assets (like Bitcoin) are increasingly being traded as goods with property value.”

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Author: Edwin Munyui

Counting Down the Final Days for Crypto Exchanges and Wallets to Set in Motion FATF’s Travel Rule

  • The FATF 24th Meeting will be to analyze the adoption of the Travel rule by member states in VASPs in their jurisdictions.
  • Most of the member states are facing compliance crunches as industry expert estimates only 10% have rolled out effective steps.

The Financial Action Taskforce (FATF) members have an impending 24th June meeting. They will be scrutinizing how well the ‘travel rule’ has been discharged to the various Virtual Asset Service Providers (VASP).

Travel Rule

In June 2019, the FATF updated guidelines that essentially covered the banking sector and other traditional financial systems. They extended the travel rule to now cover crypto exchanges and wallet providers amongst other VASPs. They would now be required to meet the same information exchange guidelines as other financial institutions when ownership of the virtual assets changed.

The travel rule was formulated to counter AML and CTF practices. It obligates financial institutions to improve their KYC protocols by ensuring collection and information sharing by requesting names, possible addresses, and account numbers to establish the parties involved in the respective transactions. This would create an audit trail, hence cracking down on criminal fronts leveraging the Virtual Assets infrastructure.

Shortly after presenting the new amendments to the travel rule, the FATF gave their member countries a year to enforce the VASPs in their jurisdictions. They would then hold a meeting to analyze steps and measures taken to align with the new standards. Although the guidelines might not be binding, the organization has warned that members not conforming with the standards might be kicked out of the body.

Countries Grappling With Compliance

CoolBitX CEO Michael Ou has offered insight into how various countries were fairing so far in the adoption of the new guidelines. Remarking that with close to two hundred member states, only 20 of them had tweaked their regulations to include the new travel rule amendments.

The remainder of the nations were on course with implementation but not fully there yet. His company is working with regulators to develop tech that will bolster compliance with the Travel Rule. They recently released their version of a solution dubbed Sygna Bridge to solve compliance woes.

He anticipates that the meeting will help the VASPs set actual deadlines for compliance with FATF standards. However, other analysts in the industry don’t share the same opinion. Siân Jones XReg Consulting expects that it would take considerably longer before all the member states achieve full compliance.

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Author: Lujan Odera