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South Korea Tax on Crypto Gains Delayed Until 2022

South Korea Tax on Crypto Gains Delayed Until 2022

South Korea parliament has officially postponed a private members’ bill that will start taxing profits from cryptocurrencies until January 2022, according to local media reports.

Rumors suggested last week the plan was to extend the implementation date by three months from the initial October 2021 date, a move that has been advocated by lawmakers belonging to the country’s National Assembly.

The country’s legislative body said more time is needed to build the relevant tax infrastructure as local cryptocurrency exchanges claimed the lack of time to build their reporting system by the deadline.

The taxation will also apply to mining operations and income from ICOs, and the new laws proposed an amendment to classify digital assets as ‘commodities’ rather than ‘currencies’.

The South Korean government is set to announce the final details of taxing income generated from cryptocurrency transactions after years of discussion about the virtual asset that yet remains in a grey area.

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Authorities are getting tough on crypto taxes

The South Korean government plans to charge residents a 20 percent tax on crypto income, which are worth more than 2.5 million Korean won (about $2,000).

Although no specific taxation standards for crypto assets have been put in place, but the finance ministry was reportedly considering re-classifying returns made on cryptocurrencies as a type of “other income.” This places crypto profits it in the same category as those earned from lotteries which has a 20 percent tax rate.

Despite the high tax tag levied on “other income” but it remains better than being taxed as a form of capital gains, as it is currently treated, which calls rates of up to 42 percent.

Historically, South Korea is one of the hottest investing and trading markets for cryptocurrencies. However, authorities have been hesitant to regulate the virtual asset class, due to their belief that cryptocurrency regulation could lend legitimacy to the sector.

Separately, the central bank is taking a “wait-and-see” approach over the issue of a government-controlled cryptocurrency, or a so-called central bank digital currency (CBDC), as of now.

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Securitize Gets FINRA Nod for Broker-Dealer/ATS Acquisition

Securitize Gets FINRA Nod for Broker-Dealer/ATS Acquisition

Security token firm Securitize said on Tuesday it got the green light from the US regulators to move forward with a duo of acquisitions, a broker-dealer and alternative trading system for digital assets.

The San Francisco-based startup, which helps firms tokenize their securities and assets, got such an endorsement to buy Distributed Technology Markets (DTM) in a bid to enter more regulated markets and reach institutional investors.

Distributed Technology Markets is part of a family of companies, and the acquisition will include taking over its sister company, Velocity Platform, which runs a money services business with money transmitter licenses in several states.

As part of the takeover, the newly acquired entity will be renamed Securitize Markets, which will offer a complete digital suite of services from primary issuance through secondary trading. Jonathan Kelfer, Co-founder and former CEO of Velocity Markets, has been named as the firm’s new CTO.

Securitize will soon be capable of offering blockchain-based securities and at some point to develop its own secondary marketplace, under the oversight of the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). This process gave the company firsthand insight into such processes.

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Regulators Clear Security Token Trading Systems

“By integrating Securitize Markets into our existing digital transfer agent platform and services, we can now offer a seamless digital solution for issuers and investors that dramatically improves the experience compared to the poorly digitized processes that are being used today,” said Securitize CEO and co-founder, Carlos Domingo.

Chris Wittenborn, CEO of Securitize Markets, also noted: “Securitize Markets is continuing the initiative of working hand in hand with regulatory bodies to construct a compliant capital markets framework for private securities – including digital asset securities. We’re excited to join forces with Securitize in an effort to continue developing this market.”

Securitize will capitalize on DTM’s regulatory approval to operate as an alternative trading system (ATS), which facilitates transactions in securities that are not publicly-traded. It creates a way for companies to tokenize equity and issue it on a blockchain without running afoul of regulatory obligations.

Many Fintech and blockchain firms have responded to US regulators’ classification of certain digital tokens as securities and therefore coming under the SEC’s supervision. Wall Street’s top watchdog says that ‎any entity that wants to become an ATS needs to register with the SEC as a broker-dealer and become a member of a self-regulating organization, such as ‎FINRA.‎

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