Cryptocurrency Tax Dispute in South Korea Reaches Boiling Point

South Korea’s crypto industry is currently in the midst of a significant dispute with the government as the topic of taxation continues to rage on. Following a possible delay in the government’s proposed tax code, a lawmaker has come out to declare that he won’t be backing down.

A Partisan Divide Over Tax Implementation

On Thursday, Naver News reported that Noh Woong-rae – a member of South Korea’s National Democratic Party – is looking to postpone the country’s crypto taxation bill until 2023. As the report explained, Noh said that the ruling Democratic Party of Korea will not go along with the Ministry of Finance’s plans to tax cryptocurrencies in 2022.

The lawmaker explained that it is challenging to get the data needed for taxation from cryptocurrency exchanges and peer-to-peer (p2p) platforms. Since the ideal infrastructure to support taxation isn’t ready, a deferral of the tax code is the only viable option.

Moves to delay the crypto tax code have been growing strong over the past few months. The proposed code will levy a 20 percent tax on income generated through crypto transactions, provided that the income exceeds 2.5 million won (about $20,000). The bill was set for passage and iomp[lementation on January 1, 2022, but the Democratic Party – which holds a slim majority in the Korean parliament – was reported to be working on a counter bill to postpone it until at least 2023.

The problem with the counter bill is that the Democratic Party only holds a slim majority in Korea’s parliament. So, getting the counter bill to pass will be slightly challenging.

It is even more complex since Finance Minister Hong Nam-Ki remains adamant in his mission to get the crypto tax law to pass in 2022. Hong himself is a part of the minority Peoples’ Power Party, and he has served in the position of Prime Minister before. So, he holds a great deal of political power.

Just yesterday, Hong reportedly asserted his desire to get the tax code passed next year, even rejecting an argument from the ruling party that a 2023 date would be perfect as it would coincide with the country’s capital gains tax on stocks.

September 24 Looms

On the issue of data collection, South Korea’s government appears to have a solution for that. In July, the government announced that crypto exchanges would need to register with the Financial Services Commission (FSC) before September 24 or face punishment. The new regulations will affect both South Korea-based exchanges and those that operate in foreign markets.

The release added that these rules also apply to exchanges that support the Korean language or whose marketing is geared towards the country’s citizens. Defaulting exchanges could face a fine of about $43,000, while their principal officers could spend up to five years in prison.

If exchanges do register with the government, they could gather information and develop a proper structure for taxation. Whether that taxation will come in 2022 or 2023 is yet to be seen.

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Author: Jimmy Aki

$1.5 Trillion Asset Manager Franklin Templeton Eyes Crypto With Latest Filing

$1.5 Trillion Asset Manager Franklin Templeton Eyes Crypto With Latest Filing

The crypto space is seeing a paradigm shift, with more legacy-backed financial institutions gradually transitioning into the blockchain industry. The latest is American multinational holding company Franklin Resources Inc.

$20 Million Total Value For Pooled Venture Fund

According to a Wednesday filing with the US Securities and Exchange Commission (SEC), the investment firm plans to raise $20 million for its Venture Capital Fund dubbed the Franklin Templeton Blockchain Fund I, L.P.

The asset manager admitted in the filing that it had raised $10 million or 50% of the targeted value. The venture is expected to channel the raised funds to blockchain startups and crypto-focused businesses in the coming months.

However, the expected value is minimal given the funds crypto startups gulp in fundraising rounds. Franklin Templeton may likely be testing the SEC’s resolve with the venture fund and could go all out if the results are favorable.

Founded in New York City in 1947, Franklin Resources is a global investment manager with over 12,000 employees spread across 34 countries. It serves clients in 160 countries and provides mutual fund investment services. It is better known as Franklin Templeton, with over $1.5 trillion worth of assets under management (AUM).

Franklin Templeton Diving Deeper Into Crypto

Franklin Templeton has a long history with the cryptocurrency industry.

In 2019, Franklin Templeton joined forces with cloud-based institutional wallet provider Curv to bolster the security of digital shares in its money market fund. This saw the investment firm use Curv’s patented multiparty computation (MPC) to secure its blockchain and connect with the Stellar network.

Franklin Templeton was also a key contributor in the $15 million series A funding round of digital asset data company, Amberdata.

The California-based company has also made overtures in establishing a “Tokenized Asset Development Department” following a job posting advertising for a cryptocurrency research analyst last month.

In the LinkedIn post, Franklin Templeton specified that the successful candidate would research the most liquid and tradable crypto-assets like Bitcoin, Ether, and others. Also, the research analyst will conduct a market overview on decentralized autonomous organizations (DAOs) and build out investment strategies for the firm’s digital products.

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Author: Jimmy Aki

NFT Leader Dapper Labs Partners With Google To Scale Its Operations On Flow Blockchain

NFT Leader Dapper Labs Partners With Google To Scale Its Operations On Flow Blockchain

Google is finally getting into the world of non-fungible tokens (NFTs) via a partnership with NFT leader, Dapper Labs.

Announced on Tuesday by Forbes, search engine giant Google announced a strategic partnership with the fourth largest NFT blockchain studio, Dapper Labs, with an aim to support the development of new Web3 products and services, such as NFTs. The partnership is the first for Google in the NFT space, showing the massive strides the digital asset industry has taken in 2021.

Google and Dapper Labs signed a multi-year partnership with Google Cloud, acting as the network operator and providing the needed infrastructure to boost the growth of Flow blockchain, Dapper Labs’ main network. The partnership paves the way for developers on FLOW, who can now connect Flow access nodes at a lower latency due to Google Cloud’s infrastructure.

Speaking on the strategic partnership, vice president of Google Cloud North America, Janet Kennedy, stated,

“This new evolution of consumers reimagining their relationship, their ownership of digital assets, digital collectibles—this is just the very beginning. We’re really excited about the work that Dapper Labs is doing and that we’re providing that infrastructure and security for them.”

Through the partnership, Google aims to provide a developer-friendly environment for blockchain services. According to Kennedy, node operators on Flow will be free to use any hardware they wish, including Amazon Web Services, but promises to streamline the process making it easier for developers to integrate Google Cloud services and its software.

Since the start of 2021, Dapper Labs, the creator of popular NFT collections such as NBA Top Shot and CryptoKitties, has grown its user base exponentially, with the collective NFT sales records reaching a high of $680 million since its launch in September 2020. Currently, the platform ranks fourth in NFT sales, only lagging behind OpenSea, Axie Infinity, and CryptoPunks.

With the partnership with Google, Dapper Labs aims at reaching a billion users in the coming year as they scale NFT collections lines running on the FLOW blockchain.

Despite the recent tumble in NFT sales since hitting all-time highs in August, Google sets its eyes on building the future of Web3 products and services on its cloud service.

“This new evolution of consumers reimagining their relationship, their ownership of digital assets, digital collectibles—this is just the very beginning.”

“We’re really excited about the work that Dapper Labs is doing and that we’re providing that infrastructure and security for them.”

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Author: Lujan Odera

European Bank with $2.6 Trillion AUM Is Launching Crypto Custody Service

European Bank with $2.6 Trillion AUM Is Launching Crypto Custody Service

CACEIS, which has $4.96 trillion in assets under custody, is nearing the launch of a crypto custody service, reported CoinDesk, citing two people familiar with the plans.

The bank, which has $4.96 trillion in assets under its custody, is working with a Swiss-based custody technology provider Metaco. Metaco already provides its services to a number of European lenders, including BBVA and Standard Chartered.

CACEIS is looking for a comprehensive service provider which is integrated into the crypto market to address their various needs and not just custody.

The Paris headquartered bank is owned by Crédit Agricole (69.5%) and Banco Santander (30.5%) and provides its services to asset managers, insurance companies, pension funds, banks, private equity, and real estate funds, brokers, and corporate clients.

Earlier this year, the world’s largest custodian and the oldest bank in the US, BNY Mellon, announced that it would hold and transfer Bitcoin on behalf of its clients for which it invested in custody tech firm Fireblocks.

At the time, it further said that it would also cover stablecoins, tokenized securities, real assets, and eventually even central bank digital currencies (CBDCs) in its digital asset unit.

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Author: AnTy

Spruce Partners with Etheruem & ENS to Improve Online Identity Verification

Spruce Partners with Etheruem & ENS to Improve Online Identity Verification

Applications for blockchain technology remain diverse, with different companies coming up with impressive ideas on integrating the technology.

One novel approach comes from Spruce – a decentralized identity software firm. The company is now working on improving identity verification, and it recently got backing from the Ethereum Foundation.

Work to Begin in Earnest

Earlier this week, Spruce confirmed in a press release that it had secured a partnership with the Ethereum Foundation to help build its decentralized identity verification system. The company would work with the Ethereum Foundation (EF) and Ethereum Name Service (ENS) to develop a secure sign-in module built on the Ethereum blockchain.

Spruce’s network had been selected after the EF and ENS submitted requests for proposals in July. The companies had sought developers who would build a secure sign-in package using Open Authorization (OAuth) – an open standard for access delegation that is frequently used to grant websites or applications access to Intenet users’ data.

As Spruce explained, it will focus on giving users more control of their data. This way, they hope to offer an alternative to big tech companies and platforms, which are notorious for data harvesting. The company added that the EF is the perfect partner, thanks to its user base that runs into the millions. Ethereum is also the largest community of developers in the crypto space, so Spruce has many resources at its disposal with this backing.

Spruce added that it would work closely with the ENS and EF to ensure that its solution is compatible with the Ethereum blockchain’s standards. Success with their project will empower millions of Ethereum users to control their digital identities and seamlessly access the web.

The first step will be user research and building specifications drafts. Core development work is expected to begin shortly.

More Use Cases for Ethereum

Identity management has become a significant focus for the blockchain space. Allowing people to seamlessly access the web while controlling their data could be one of the biggest ways that the industry disrupts traditional tech, and Ethereum has had a major role to play in that.

In July, Numio – a layer-two scaling solution, raised $1.25 million in funding to push into decentralized finance (DeFi). As part of the company’s expansion, Numio will also be building on its identity management system. The system uses zkProofs to let users verify their identities on third-party platforms without sending any identity documentation.

Numio’s authentication solution uses public-key cryptography, which is heralded as more secure than the Time-based One-Time Password (TOTP) used by platforms like Authy and Google Authenticator.

Operations like these are some of the reasons why the Etheruem blockchain remains an incredibly important part of the crypto ecosystem. Ethereum’s profile has risen significantly over the last year, and there has been a lot of talk about its token – Ether – flipping Bitcoin to become the most valuable cryptocurrency.

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Author: Jimmy Aki

Ukraine Passes the Law to Regulate Virtual Assets With Nearly Unanimous Vote

Ukraine Passes the Law to Regulate Virtual Assets With Nearly Unanimous Vote

This is a step in the direction of Ukraine’s plan to open a cryptocurrency market to businesses and investors by 2022.

The Ukrainian Parliament passed a law this week that legalizes and regulates virtual assets in the country.

The bill was drafted in 2020 and was passed on Sept. 8 with support from 276 lawmakers, while only six were against the legalization of bitcoin and cryptocurrencies.

For the first time, the bill also provides clarity on digital wallets and private keys in Ukraine.

With this bill, the country aims to provide clarification on this asset class and protect those who own them. While crypto-assets were previously illegal in the country and citizens could buy and sell them, the law enforcement agencies treated the virtual assets as a scam. They conducted raids, often confiscating expensive equipment.

Just last month, the Security Service of Ukraine (SBU) blocked a network of what it called “clandestine cryptocurrency exchanges” running in Kyiv and claimed that these exchanges were facilitating money laundering and providing transaction anonymity.

But the law will allow crypto businesses to work officially in the country. To register a crypto business, a company is needed to prove that it is transparent and has an excellent reputation.

‘It will reduce stereotypical attitudes towards cryptocurrencies and will help them to become normal financial instruments,” said Oleg Kurchenko, CEO of virtual asset exchange platform Binaryx.

While Ukraine’s Ministry of Digital Transformation, the National Bank, and the National Securities Commission are the main regulator of the virtual asset market, as per the law, the government wants to have another regulator to issue permits to crypto companies.

If signed by President Volodymyr Zelensky, where it is now headed, the law will protect the crypto owners and exchange platforms from fraud and determine how it will regulate the cryptocurrency market in the future, according to the local publication.

The country further plans to open a crypto market for investors and businesses by next year, a spokesperson of the Ministry of Digital Transformation told the Kyiv Post. Mykhailo Fedorov, Ukraine’s Minister of Digital Transformation, himself has said previously that the country was modernizing its payment market so that its central bank would be able to issue digital currency.

On an official state visit to the U.S. in August, President Zelensky also spoke of Ukraine’s budding “legal innovative market for virtual assets” as a selling point for investment.

But this would first require the parliament to pass the laws and amend the Tax Code and the Civil Code. Jeremy Rubin, CEO of bitcoin R&D lab Judica said,

“Ukraine’s improved legal status for bitcoin is a laudable symbolic measure that we progress towards a world that respects individual rights universally.”

“But it is only symbolic — bitcoin seeks neither permission nor forgiveness in its mission to protect persecuted communities from unjust governments.”

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Author: AnTy

Former RBI Regulatory Chief Advocates for Crypto Regulations in India

India’s relationship with cryptocurrencies has continued to be murky at best. The situation is made markedly worse by regulators, who have made a habit of being coy on the subject.

However, one former policymaker has called on the Reserve Bank of India to adopt crypto and go deeper into the digital currency age.

Building the Right Environment for Assets to Thrive

Earlier this week, Rama Subramaniam Gandhi, a former governor at the Reserve Bank, spoke at the inaugural Hodl 2021 virtual conference. Gandhi had tried to push the agency into adopting cryptocurrencies and creating an enabling environment for the assets to thrive in India to no avail.

The inaugural Hodl event, which was organized by the Blockchain and Crypto Assets Council of the Internet and Mobile Association of India, included several notable people across India’s crypto industry. They had reps from companies like top exchanges WazirX and CoinDCX, trading service ZebPay, and blockchain developer Polygon. While many of them gave opinions about the potential for blockchain and crypto to improve lives across India, Gandhi’s speech focused more on the regulatory angle.

Gandhi had led the Reserve Bank from 2014 to 2017. As the former policymaker pointed out, cryptocurrencies should be treated in the country as a commodity or an asset – and appropriately taxed. He added that a stable regulatory framework would make it easier for Indians to invest in and hold cryptocurrencies.

“Cryptocurrencies should be paid for through normal payment channels. If they are not, it should be deemed mined, and capital gains tax must be levied. That is like voluntary disclosure.”

Murky Crypto Stance Won’t Affect CBDC Development

India’s stance on crypto has continued to be highly controversial. The Reserve Bank banned commercial banks from transacting with crypto companies in 2018, but the decision was overturned last year following a landmark ruling from the Supreme Court.

But, regulators still weren’t done. Legislation tagged the “ Cryptocurrency and Regulation of Official Digital Currency Bill 2021” was introduced earlier this year to ban crypto, although it hasn’t been signed into law. The Economic Times reported in May that the government might consider overturning the ban to regulate digital asset trading instead. But, not much action has been made in either direction.

Despite the murky stance on crypto, India’s government remains resolute in its mission to build a central bank digital currency (CBDC). Speaking to CNBC recently, Reserve Bank governor Shaktikanta Das explained that CBDC trials could commence before the end of the year.

Das pointed out that the Reserve Bank is very careful in handling a possible digital rupee, even as several other countries worldwide progress with currency digitisation. He explained that the regulatory watchdog is more concerned with examining the CBDC’s impact on the financial sector, especially with affected monetary policy.

On the technical front, the Reserve Bank is also looking into the merits of using blockchain for the proposed CBDC. With all of this, Das expressed confidence in the Reserve Bak’s ability to get a framework ready to start tests by December.

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Author: Jimmy Aki

Cleansing or Reversal? Over-Leveraged Apes Get Punished and Funding Resets as OI Drops Over 21%

Now that the market has reset, participants are expecting to go higher from here, with funding turning negative and exchanges broken as people try to get their hands on the dip.

The flash crash on Tuesday wiped out more than $380 billion from the cryptocurrency market, with Bitcoin falling to about $42,000 and Ether going under $3k. After bouncing back to $47k and $3.5k, BTC and ETH are now hovering around $46k and $3,400.

According to Delphi Digital, “a negative feedback loop of liquidations seems to be the primary cause, as the market punished over-leveraged apes.”

On Sept. 7, $3.5 billion were liquidated. But with the price not yet stabilized, in the last 24 hours, 353,908 traders have been liquidated for $3.46 billion — the most since May 19.

Bybit accounted for 35.7% of these liquidations at $1.33 billion, followed by Huobi at 23%, $860 million. Binance’s share was 21.3%; however, given that they don’t report the correct numbers, liquidations on the leading cryptocurrency exchange are more than likely much higher than the Bybt recorded $792 million.

The majority of the exchanges had 85% to 99% of these liquidations coming from longs, while only Deribit and FTX had a good 48.32% and 30.37% coming from shorts.

With so much leverage wiped out of the market, open interest on the exchanges also took a hit.

Bitcoin futures contracts saw a loss of $4.18 billion in OI, going back to the early August level. As for Ether, the OI has fallen to $8.37 from the all-time high of $11.62 on Monday.

On CME, OI on Ether is at $709.5 million, a level that was seen on Sept. 1st and still much higher than the May high of $607.88 but down from $860.75 million ATH. As for Bitcoin futures, OI is $1.51 bln, down from $1.88 bln on August 29th and $3.26 bln peak from Feb 26.

As Delphi Digital noted, “High open interest can be seen as traders starting to open more futures positions, most often with some amount of leverage.”

As a result, the long-term funding trend has reset to 0.05%, much lower than the prior peaks of 0.20%. Low funding implies a balanced demand, not skewed towards longs or shorts.


Before the crypto carnage happened on Tuesday, futures traders were eyeing further upside as seen in rising basis premiums which suggested a growing bullish sentiment among the leveraged traders.

When the $50k breakout occurred, the futures’ basis finally moved upwards last week after more than a month of no developments in the futures market. In the offshore futures market, the basis saw a sharp rise — on FTX, it went to 14% after trailing around 8-10% throughout August, while on CME, it grew far less rapidly.

But now, the liquidation has provided the market with “a meaningful leverage reset.”

Now that the market has reset, participants are expecting to go higher from here, with trader Light saying,

“32% haircut to total derivatives open interest, funding structure reset after an orgy of a long weekend. Buying versus forced sellers is almost always a good strategy. If had to guess, dip feels more like a cleansing than a reversal.”

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Author: AnTy

Australian Neo-bank Volt Partners With Crypto Exchange In A First-of-Its-Kind Deal In The Country

Australian Neo-bank Volt Partners With Crypto Exchange In A First-of-Its-Kind Deal In The Country

Australian neo-bank Volt has partnered with BTC Markets (BTCM) to provide the cryptocurrency exchange with banking capabilities.

BTCM, which has around 325,000 Australian customers, will now be able to offer its users access to a corporate cash management account with real-time notifications and payment automation.

In the coming months, the exchange will invite its customers to open Volt bank accounts for real-time trading, the companies said.

Deposits in Volt accounts are actually covered by the protection of a maximum of A$250,000 (roughly $186k) per account holder under the Financial Claims Scheme, added the firm.

This is the first-of-its-kind deal in the country which could help neo-banks break into the banking market with low-cost offers. Australia is currently dominated by the “Big Four” banks Commonwealth Bank of Australia, Westpac Banking Corp, New Zealand Banking Group, and National Australia Bank, which collectively control nearly 80% of the market.

Earlier this year, Australia’s banking watchdog, the Australian Prudential Regulation Authority (APRA), initiated stricter requirements for companies seeking banking licenses. Further increasing the scrutiny of new entrants in the market, it highlighted concerns around “neo-banks.”

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Author: AnTy

Europeans Favor National Cryptocurrency Regulation: Survey

EU citizens are getting around to crypto regulation, with several respondents noting that they would prefer national regulation of the nascent industry to an EU intervention.

Free from the European Union

A recent survey has shown that more European citizens would like their countries’ financial regulators to provide more clarity on digital assets sooner rather than later.

The survey in question was conducted by Redfield & Wilton Strategies – a Market research company based in London. The company took responses from citizens in 12 European countries, including France, Germany, Greece, Estonia, Italy, and Lithuania.

The survey also sought to gauge public opinions about a possible national digital currency and the prospects of crypto regulations across the continent.

Among the countries, respondents from Italy showed the highest support for a state-backed digital currency, with 41% of respondents giving the green light. Greece followed this with 40% and Estonia with 39%.

The Netherlands had the highest number of respondents against this plan, with 37% clearly against the idea as opposed to 18% in favor.

Interestingly, the survey also showed that most respondents would prefer their countries to develop cryptocurrency regulations instead of waiting on the European Union.

Since September 2020, the European Commission has been working towards providing a uniform approach to crypto regulations across the continent. In a regulatory proposal titled “Markets in Crypto Assets,” the agency explained that it had seen the need to ensure closer crypto regulations across Europe.

The European Commission based its approach on two reasons. The first was to prevent the rise of fragmented regulations across European countries, while the second was to stem the rising tide of stablecoins.

So far, the proposal has been subject to intense debates, with several bodies raising concerns over its implications for growth in the crypto market and beyond. However, this latest poll could serve as a signal that the region is ripe for crypto regulation.

Slovenia’s New Crypto Tax Revamp

Some countries have already begun taking bold steps towards regulating the highly volatile asset class. Earlier this week, the Financial Administration of the Republic of Slovenia (FURS) reportedly began considering imposing a 10% taxable income fee on crypto earnings.

Local news sources stated that the current taxation scheme in Slovenia involves the agency analyzing citizens’ digital asset activities on a case-by-case basis, even as far as examining their transactions. But, with a proportional taxation system, the agency can now streamline the process and focus only on crypto-based purchases as well as crypto-fiat conversions. Using these parameters, individuals will have to pay a 10% tax rate on their crypto earnings.

“We would like to emphasize that it is not profit which would be taxed but rather the amount a Slovenian tax resident receives on their bank account on turning the virtual currency into cash or when buying a thing,” the report added.

While the tax rate is yet to take hold, regulators and policymakers are probably already discussing the possibility.

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Author: Jimmy Aki