India Launches Crypto-Enabled Web Browser Initiative

While cryptocurrencies may be banned in China, crypto trading activity continues in some corners, nonetheless, sometimes through accessing overseas exchanges. With that, authorities recently uncovered a massive underground banking operation that exploited crypto trading platforms to evade local forex regulations.Photo by Manuel Joseph on Pexels$2.2 billion laundering operationOn Sunday, an account on popular Chinese social media platform WeChat run by China’s State Administration of Foreign Exchange (SAFE) published details of the $2.2 billion laundering operation bust. Xu Xiao, the Inspector at the Qingdao Branch of the State Administration of Foreign Exchange, revealed that the scheme involved underground banks who purchased virtual currencies and then sold the virtual currencies through overseas trading platforms to obtain the foreign currency they needed. This process, he explained, completes the conversion of yuan and foreign currencies, constituting the illegal act of buying and selling foreign exchange. Stringent capital controlsChina enforces stringent rules on money transfers outside the country. Citizens are limited to exchanging up to $50,000 in foreign currency and require a permit for transactions beyond that limit. Any transaction exceeding the limit without a permit is considered money laundering. During a recent investigation, authorities seized cryptocurrencies valued at approximately $28,000 in Tether, Litecoin and other digital currencies. However, the operation is estimated to have facilitated the movement of over $2.2 billion, involving more than a thousand bank accounts across 17 provinces and municipalities. Monetary control loopholesChina, once the largest cryptocurrency market, imposed a comprehensive ban on crypto exchanges in September 2017 and subsequently expanded its restrictions to include crypto mining and trading. Despite these measures, reports have surfaced about underground crypto exchange operations. Earlier this year, an investigative report by the Wall Street Journal found that global exchange Binance continues to do thriving business with Chinese customers. Global crypto exchanges are reportedly still onboarding Chinese clients indirectly. The South China Morning Post (SCMP) recently accused Binance of facilitating Chinese crypto trading accounts by falsely claiming they are from Taiwan. While mainland China adopts a hostile stance towards cryptocurrencies, the special administrative region of Hong Kong remains progressive in the sector. Hong Kong’s regulatory authorities have introduced specific rules for cryptocurrencies and are licensing crypto exchanges operating within the jurisdiction. Arthur Hayes, the co-founder of the BitMEX crypto derivatives platform, recently described Hong Kong as the gateway for mainland China to global capital markets. Hayes asserted that wealthy Chinese individuals all bank in Hong Kong and with that, they all have access to crypto exchanges and brokers. In Cambodia, it is understood that illicit Chinese-linked activities oftentimes implicate the use of U.S. dollar stablecoin Tether (USDT) to move funds in and out of China even though Tether is banned in Cambodia. The latest crackdown in China underscores the ongoing challenges faced by authorities in controlling crypto-related activities, highlighting the dynamic nature of such activity within and adjacent to mainland China. As regulatory scrutiny intensifies, the contrast between mainland China’s approach and Hong Kong’s more open stance toward cryptocurrencies becomes increasingly evident. 

Japan’s FSA Proposes Tax Exemption for Unrealized Crypto GainsThe Financial Services Agency (FSA) of Japan has taken the step of putting forward amendments that provide a notable tax exemption for unrealized gains on cryptocurrency holdings.Photo by Erik Eastman on UnsplashFSA proposalThe move is significant in that it spares domestic companies from the standard 30% corporate tax rate typically imposed on digital assets up until now. According to reports in local media, that proposal was detailed in a comprehensive 16-page document outlining various regulatory modifications.The most pivotal change within this document is the exemption of domestic companies from the annual “unrealized gains” tax on cryptocurrencies. Unlike some countries that only tax crypto assets when they are converted into fiat currency, Japan currently enforces an annual tax on these digital assets.2023 tax reform agendaThe proposed amendment has garnered support from the Ministry of Economy, Trade and Industry, indicating its potential passage. These discussions are part of Japan’s broader tax reform agenda for 2023, suggestive of the Asian nation’s interest in fostering a favorable environment for the blockchain and cryptocurrency industries.It is important to note that this tax exemption applies exclusively to companies that issue their own tokens and does not extend to entities solely involved in investing in other digital currencies. Additionally, individual crypto investors will still be subject to a maximum income tax rate of 55% on earnings exceeding JPY 200,000 ($1,355) related to cryptocurrency, categorized as “miscellaneous income.”The exemption is structured in a way that excludes these digital coins when assessing a company’s asset market value, provided specific conditions are met. Presently, Japanese law mandates that companies holding crypto assets must pay taxes on unrealized gains at the end of each tax period.To qualify for the tax exemption, a company must meet specific criteria outlined by the tax authority. Firstly, the company must be the issuer of the cryptocurrency in question. Additionally, it must retain continuous ownership of the crypto asset after issuance, while the asset itself remains subject to transfer restrictions.Blockchain ambitionsThis development aligns with Japan’s broader ambition to nurture and expand its blockchain and cryptocurrency sectors. Prime Minister Fumio Kishida recently articulated a vision for a “new form of capitalism,” emphasizing the importance of fostering innovation and growth in emerging industries, inclusive of the Web3 sector. As Japan moves forward with these changes, it signals its interest in creating a conducive environment for blockchain and crypto ventures to thrive.Over time Japan has been iteratively building a framework in respect of digital assets. In 2017 the country recognized Bitcoin as a legitimate property in accordance with the Payment Services Act (PSA). That same year, the Tax Agency classified crypto earnings as miscellaneous income. In 2020, crypto assets were included in Japan’s fund settlement law. Around the same time frame, the FSA brought in the requirement for crypto exchanges to register and obtain a license.These amendments also form part of a series of changes that the Japan Blockchain Association (JBA), an industry advocacy group, has been canvassing for. The proposed changes reflect a pragmatic approach to taxation, doing away with a paper profits taxation treatment in favor of a more progressive approach.

Metaverse Expo 2023 in Seoul: Exploring the Future of the 3D InternetThe Metaverse Expo 2023 is scheduled to be held at the COEX, an exhibition and convention venue in Seoul, from June 14 to 16, according to a press release. With its focus on the future of the three-dimensional Internet, this event seeks to attract metaverse enthusiasts eager to explore cutting-edge technologies. This year, the “Metaverse + Generative AI Summit” will run alongside the expo, showcasing the diverse applications of generative AI in enhancing efficiency within the metaverse.Photo by julien Tromeur on UnsplashKorea’s strategy for metaverse promotionIn February last year, the Korean Ministry of Science and ICT revealed a metaverse promotion strategy involving a comprehensive support plan of 237 billion KRW ($179.6 million). This initiative seeks to cultivate an augmented reality ecosystem by developing metaverse platforms, fostering metaverse companies, and aiding their international expansion.The expo will host exhibits centered around four key topics: metanomics, digital twins, education, and NFTs. Attendees will explore innovative business models, learn about the replication of physical objects in the virtual realm, discover the potential of the metaverse in reshaping educational approaches, and understand the role of non-fungible tokens in establishing digital ownership.Side events to support businessesIn addition to the main exhibits, the expo will host various side events such as export and investment counseling sessions, new product presentations, and seminars. In collaboration with the Korea Trade-Investment Promotion Agency (KOTRA), a consultation program will be offered to encourage overseas buyers to engage with Korean companies. This program aims to support Korean businesses in promoting their products and services overseas, as well as connecting them with new buyers and investors who can contribute to their growth and expansion.Previously known as the Seoul VR-AR Expo, this event has been an annual feature since 2018, with VR representing virtual reality and AR representing augmented reality. In line with evolving industry trends, the event was rebranded to the “Metaverse Expo” in 2022. This year’s event will mark its sixth running, further cementing its role as a beacon for developments in the rapidly advancing metaverse landscape.