Regs Roundup: SEC Actions, Crypto Tax-Free in Korea, New Chinese Laws
In this roundup, we cover several crypto-related actions by the U.S. Securities and Exchange Commission (SEC) and the New York regulator’s crypto job posting. We also cover new Chinese laws, South Korea’s tax clarification, India’s blockchain education, the IMF working with the Philippines’ central bank, as well as crypto regulatory developments in Turkey and Qatar.
Also read: Regulatory Roundup – China Blockchain ETF, New French Crypto Rules, Tokens Money in Russia
SEC’s 3 Cases, NY Regulator Hiring
The U.S. Securities and Exchange Commission (SEC) has been active this past week. On Jan. 3, the SEC announced that it had settled fraud action with Longfin CEO Venkata S. Meenavalli, who agreed to pay $400,000. Longfin and Meenavalli allegedly misrepresented the company in public filings to qualify for a Regulation A+ offering. They also misrepresented the offering to Nasdaq to meet its listing requirements. The Commission says more than 90% of Longfin’s reported revenue for 2017 was fictitiously derived from sham commodities transactions.
On Jan. 2, the SEC sent a letter to the Eastern District Court of New York regarding its plan to distribute $1.4 million collected from the fraudulent Plexcoin ICO to its investors. “The SEC anticipates that upon completion of the distribution plan approval process in Canada … the SEC will file a motion with this court recommending a course of action with respect to the U.S. assets,” the Commission wrote.
On the same day, the SEC filed a court order seeking financial documents from Telegram which it hopes will reveal how much the company spent from the funds collected in two token sales in early 2018. The agency needs this information before next week’s testimony of three Telegram employees, including CEO Pavel Durov. However, Telegram is unwilling to disclose the information.
Meanwhile, the New York State Department of Financial Services (DFS), the Bitlicense regulator, has a crypto job vacancy. The regulator is seeking candidates for the position of Virtual Currency Supervision Analyst for its Research and Innovation Division to analyze financial data and reconcile capital calculations submitted by virtual currency licensees. However, the application deadline was Jan. 6.
South Korea Not Taxing Crypto Profits
In South Korea, the government has clarified that crypto profits are not taxable under the existing tax law. Taxes cannot be imposed on income from activities that are not explicitly defined under the tax law, including crypto trading. However, the Korean Ministry of Economy and Finance, which oversees the country’s economic policy, has confirmed that it is reviewing how other countries tax crypto transactions in order to amend the tax law.
The Korean National Tax Service, however, has imposed 80.3 billion won ($69.5 million) in withholding tax on trades conducted by foreign customers of Bithumb Korea, one of the largest crypto exchanges in the country.
IMF Providing Philippines With Crypto Advice
In the Philippines, the International Monetary Fund (IMF) has been providing the country’s central bank, the Bangko Sentral ng Pilipinas (BSP), with technical assistance including on crypto assets. The IMF sees the potential in the Philippines to become an important market for crypto assets and has provided some recommendations to the BSP regarding crypto regulation.
The IMF has encouraged the BSP to consider collecting data from the country’s approved crypto exchanges for macroeconomic analysis, in particular, international financial flows using crypto assets. The IMF suggested that the BSP request “aggregated data, on a quarterly basis, on gross transactions, indicating the country of origin and destination of the funds transacted.” Furthermore, “it would be useful to breakdown the parties involved in the transactions between individuals, financial corporations, and nonfinancial corporations,” the IMF advised.
India’s Blockchain Education, Garg’s Crypto View
The Indian government has been heavily into blockchain technology. The Doha Chapter of the Institute of Chartered Accountants of India (ICAI) held a certificate course on Blockchain Technology from Dec. 19 to 23.
The National Power Training Institute (NPTI), under India’s Ministry of Power, is hosting a one-day national blockchain seminar on Feb. 28 at the NPTI Badarpur in New Delhi. This seminar is separate from the five-day blockchain program sponsored by All India Council for Technical Education (AICTE) Training and Learning (ATAL) Academy, which the institute is organizing. The target audience for this event includes IT professionals, banking and stock market professionals, power sector professionals, faculty members, and research scholars.
Meanwhile, a well-known figure in the Indian crypto community, former Finance Secretary Subhash Chandra Garg, has written a blog post stating that crypto will not survive. He headed the interministerial committee that drafted the bill to ban cryptocurrencies. “I am convinced that private crypto-currencies would have a very short future,” he wrote.
New Chinese Laws
Several crypto-related regulatory developments happened in China this past week. Firstly, China implemented a Password Law on Jan. 1. The law, passed in October 2019, categorizes passwords into core, common, and commercial passwords. “The aim is to foster the core technology of the digital era — blockchain technology and to provide a legal basis for the issue of digital RMB based on blockchain technology,” China Money Network explained. “The Chinese government will strictly regulate core passwords and plain passwords, and is committed to nurturing industry in the area of commercial passwords.”
Secondly, China is also reportedly amending its blockchain-related patent guidelines. Starting Feb. 1, a section will be added to the Patent Examination Guidelines which “covers provisions for the examination of invention patent applications that claim mathematical limitations and business methods.”
Thirdly, the Guangdong government has launched a blockchain-based financing platform and issued its first online unsecured loan. The platform incorporates 213 types of government data from 26 government agencies. It is the first blockchain-based platform to evaluate the credit of small and medium-sized businesses by aggregating the information of more than 11 million enterprises in the province to create credit ratings. The platform aims to help small companies in the region receive loans faster than from commercial banks.
Moreover, the Qingdao government hosted a major blockchain conference at the end of December. During the conference, the Center for Information and Industry Development (CCID), under the Ministry of Industry and Information Technology, released a report on the state of the country’s blockchain industry. According to the report, the number of registered companies claiming to use blockchain technology in their businesses climbed past 33,000 in December. Among them, 57% are blockchain-centric startups, 23% are internet companies with blockchain projects, and 12% are financial institutions with blockchain business. Moreover, 28% are publicly traded companies.
Turkey Ramps Up Regulatory Efforts
Turkey has ramped up efforts to regulate the crypto industry following reports that the share of crypto owners in Turkey is among the highest in the world. The country currently has no specific crypto regulations. However, public authorities have reportedly asked the Capital Markets Board of Turkey (CMB), the supervisory agency responsible for the securities market, to prepare the necessary supervisory measures.
Qatar’s Crypto Announcement
The Qatar Financial Center (QFC) Regulatory Authority tweeted on Dec. 26 that “In accordance with QFC Law No. 7 of 2005 and the Financial Services Regulations (FSR), all authorized firms … are not currently permitted to provide and/or facilitate the provision of virtual asset services or otherwise exchange, trade or deal in virtual assets, until further notice.” Penalties will be imposed for violations.
What do you think of the regulatory developments covered in this roundup? Let us know in the comments section below.
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