Paxful’s Ray Youssef heads up Noones financial app startup

Korean regulator monitors non-listed token amidst peer-to-peer trading surgeThe South Korean financial regulator is closely monitoring BTCMobick, a non-listed token issued by crypto influencer Oh Tae-min, who is known for authoring books like “The Great Bitcoin” and “Bitcoin and the Geopolitics of the Dollar.” The Financial Services Commission (FSC) is cautioning local crypto exchanges regarding the potential for price manipulation should the token be listed.Photo by Daniel Bernard on UnsplashBTCMobick TokenThe BTCMobick token is reportedly being traded peer-to-peer at around KRW 300,000, which is approximately equivalent to $230, in chat rooms of messaging apps like KakaoTalk outside of cryptocurrency exchanges. The token has gained enough traction to spur the emergence of dedicated apps that facilitate these peer-to-peer trades, charging fees for their services. Based on the size of the chat rooms and apps involved, it is estimated that approximately 3,000 participants are trading the token, according to a report by local news website Etoday.As per another coverage by the same outlet, the Virtual Asset Inspection Division of the Financial Intelligence Unit (FIU), which operates under the FSC, has inquired with local crypto exchanges on two occasions — once in September and again this week — about whether they have listed or are planning to list the BTCMobick token. It’s rare for the financial authority to specifically target a particular token when making inquiries with crypto trading platforms.Potential price manipulationAn FIU official explained the rationale behind the agency’s inquiry into crypto exchanges. The official stated that the probe aimed to caution the exchanges about potential price manipulation of the BTCMobick token. The concern is that many crypto users might suffer losses if such a token, which has been experiencing a continual rise in price outside of trading platforms, were to be listed. Currently, legal penalties for cryptocurrency price manipulation fall under the Virtual Asset User Protection Act, which will not be enforced until July 2024. This indicates a regulatory gap in the immediate term.Hwang Suk-jin, a professor at Dongguk University’s Graduate School of International Affairs and Information Security, pointed out that while giving out privately generated tokens to friends or acquaintances doesn’t raise any legal issues, the situation changes once these tokens are listed for trading on exchanges and distributed more broadly in the market. In such scenarios, these tokens can become a source of legal disputes, he explained.Amidst these developments, there are circulating rumors suggesting that BTCMobick is on the verge of being listed on exchanges. An industry insider has mentioned that there are brokers actively spreading these rumors, indicating that the token might soon become publicly tradable.Oh Tae-min’s denial of rumorsMeanwhile, Oh Tae-min, the creator of BTCMobick who has been distributing his token for free, states that the token is part of an experiment intended to mimic the early stages of Bitcoin. However, critics are concerned that the personally issued token has no practical utility. Addressing the circulating rumors about the token’s potential listing on exchanges, Oh asserts that these rumors are baseless and false. He further warns that any brokers spreading such rumors are likely engaging in fraudulent activities.

Japan’s Financial Services Agency (FSA) has moved recently to address concerns related to peer-to-peer (P2P) transactions while in a separate development, the country’s GameFi community is calling for regulatory change to enable greater liquidity. The two distinct developments both relate to getting the balance right in terms of crypto regulation from the perspectives of regulators and lawmakers and crypto sector entrepreneurs and participants.Photo by Manuel Cosentino on UnsplashAddressing concernsIt emerged last week that the FSA had proposed a number of measures to safeguard users against “unlawful transactions,” causing alarm that any such moves would inhibit the P2P transactions market. Responding to a query from Cointelegraph, the FSA elaborated that its recommendation does not encompass "transactions from one individual to another." Instead, it aims to bolster measures against illicit money transfers, particularly instances where an individual deposits cash from their bank account into an account belonging to a crypto asset exchange service provider. The regulator clarified that under the new recommendations, banks would intercept suspicious transactions where the sender seeks to alter their name for the purpose of depositing funds into the crypto platform. The FSA outlined that this situation arises where a fraudster convinces an innocent exchange user to effect the name change, so that exchange rules can be circumvented and the fraudster can receive funds from the scam victim. According to the FSA, numerous financial institutions have already implemented these measures, although the agency has not received any reports of specific cases raising concerns regarding crypto asset markets. Notably, the FSA emphasizes that its recommendations are not universally mandated for all financial institutions, with banks expected to devise and implement measures tailored to their specific circumstances. Solving crypto market liquidity issuesWith that clarification, it appears that the measures won’t have the negative impact on P2P crypto markets as many market participants originally feared. Meanwhile, in a distinct development, Japan's blockchain gaming community has approached the Liberal Democratic Party (LDP) to seek assistance in bolstering liquidity within Japan's crypto asset market. Taking to the X social media platform on Wednesday, Ryo Matsubara, director of Oasys, a GameFi blockchain, outlined that he had visited the LDP's digital society promotion headquarters on behalf of Japanese blockchain gaming projects to raise concerns about stringent regulations impeding liquidity in Japan, which directly impedes the growth of the GameFi ecosystem. Matsubara advocates for regulations that incentivize safe cryptocurrency investment, positing that increased liquidity, marked by a surge in buyers and sellers, could result from such measures. Oasys intends to continue collaborating with the government to enhance Japan's global competitiveness in the Web3 market, with Matsubara expressing confidence in Japan's potential to reclaim its illustrious gaming legacy on Web3. While Japan initially harbored skepticism toward crypto adoption, its stance has softened in recent times. Matsubara acknowledged the positive impact of a recent crypto-related tax reform which was enacted in December. In September 2023, the Japanese government commenced planning to permit startups to raise public funds through crypto asset issuance. That bill was approved last week and now goes forward to the Japanese parliament for further deliberation. These recent developments demonstrate that Japan is navigating regulatory complexities as it seeks to balance innovation with consumer protection in the burgeoning crypto space.

Japan’s financial sector is poised for a significant change as the Financial Services Agency (FSA) unveils new tax reform guidelines for fiscal year 2025. This marks the first time virtual currency transactions will be addressed within Japan's tax framework, signaling a pivotal shift in the country’s stance on cryptocurrency taxation. Current taxation issuesPresently, Japan imposes a maximum tax rate of up to 55% on cryptocurrency revenues, a figure that has been criticized for deterring investment in the growing crypto market. Crypto profits are taxed as miscellaneous income, with the highest rate applying to earnings over 200,000 Japanese yen. Corporate holders of crypto assets face a flat 30% tax on their holdings, irrespective of their income or profits. These high tax rates contribute to Japan's relatively low cryptocurrency adoption rate, placing the country 18th in the 2023 Global Crypto Adoption Index by Chainalysis.Photo by Tobias Wilden on UnsplashIn response to rising demands from both investors and businesses, there is strong advocacy for a more favorable tax structure. The new proposal suggests reducing the crypto tax rate to 20%, aligning it more closely with the tax rates applied to traditional financial assets like stocks. This reform is viewed as essential for rejuvenating the industry, especially given Japan’s increasing engagement with cryptocurrencies. Japan's interest in cryptocurrencies extends beyond individual investors. Major institutions are making notable advancements in the field. Ripple, a key player in the crypto space, has teamed up with over 50 Japanese financial institutions to develop a new payment infrastructure leveraging blockchain technology. Meanwhile, private companies like Metaplanet are also expanding their crypto investments, recently securing a loan of 1 billion Japanese yen ($6.8 million) at an annual percentage rate of 0.1%.  Impending tax changesThe FSA's decision to include crypto assets in the 2025 tax reform proposal represents a significant departure from previous reluctance to formally recognize the industry. The proposed changes would expand loss offset provisions, potentially aligning crypto assets with the tax treatment of public bonds and listed stocks. This adjustment could offer relief to investors by allowing them to offset losses against their crypto gains. Despite these promising developments, the implementation of these proposals remains uncertain. A previous proposal to reduce the crypto tax burden has failed to produce policy changes. Nevertheless, the inclusion of crypto assets in the FSA’s reform agenda is a positive step toward a more supportive regulatory environment. Japan’s current high tax rates contrast sharply with other crypto-friendly regions in Asia. For instance, the United Arab Emirates (UAE) has become a major hub for crypto businesses by imposing no taxes on crypto profits. Similarly, countries like Hong Kong, Singapore, Thailand and Indonesia have attracted significant crypto activity due to their progressive regulations and lower tax rates. Conversely, India’s 30% flat tax on crypto has prompted many companies to relocate to more favorable jurisdictions such as Dubai. As Japan considers transitioning to a more crypto-friendly tax regime, there is cautious optimism about its potential impact on the industry. If successfully implemented, the proposed changes could boost adoption and growth, making Japan a more appealing location for crypto businesses and investors. The ultimate effect will depend on the government’s reception and execution of these proposals in the coming years. For now, the inclusion of crypto assets in the tax reform agenda marks a promising step toward a more balanced and supportive regulatory landscape for the cryptocurrency industry in Japan.