Korean Democratic Party to urge FSC to change its stance on spot BTC ETF

Indonesia witnessed a striking decline in cryptocurrency tax revenue for the year 2023, according to local media. 63% decreaseA report by Indonesian business and financial publication Kontan detailed a tax take drop to $31.7 million (Indonesian rupiah 467.27 billion). That tax collection is in sharp contrast to the partial collection period in 2022 when the crypto tax regime was initially introduced. It represents a drop of around 63%. The decline is part of a broader tax reform targeting the "digital economy" implemented in 2022, with the Indonesian government expressing the expectation that the reform would enhance tax collection, fostering a "healthy and fair taxation system."Photo by Nick Agus Arya on UnsplashDeclining transaction volumesDespite bitcoin's impressive surge of approximately 160% throughout 2023, the dip in crypto tax revenue was notable. The decrease is closely tied to a drop in transaction volumes over the same period compared to 2022. A report by CoinDesk Indonesia last week put that trading volume decrease at around 60%. Crypto transactions in Indonesia face dual taxation – a 0.1% income tax and a 0.11% value-added tax (VAT). Additionally, local crypto exchanges are subject to a special tax of approximately 0.04%, contributing to the national digital asset bourse. Disadvantaging local exchangesLocal exchanges in Indonesia, including prominent ones like Indodax, have voiced discontent with the high tax rates, contending that these levies are driving users towards unregulated offshore exchanges. Earlier this month Indodax CEO Oscar Darmawan called on the Indonesian government to review crypto tax rates. Darmawan highlighted that the cumulative taxes on crypto transactions often surpass the trading fees paid by users, posing a risk of users seeking more cost-effective alternatives. Local exchanges suggest that crypto transactions should only be subject to income tax, eliminating the VAT component. This proposal comes as Indonesia's Financial Services Authority (OJK) prepares to implement cryptocurrency regulations in early 2025. The aim is to align the taxation of cryptocurrencies with their market nature, possibly redefining them more as securities than commodities. Inadequate tax regulation can lead to a decline in local market activities, potentially resulting in capital flight to more favorable jurisdictions. Indonesia's situation serves as a reminder of the crucial need for policies that understand and adapt to the dynamic nature of the cryptocurrency sector. India is being similarly challenged. Local exchanges there have also complained of punitive taxation, which resulted in Indian users migrating to offshore exchanges. That scenario led indigenous exchanges to lobby the government to take action. The authorities have duly acted, flagging a number of global exchanges for operating illegally within India. It’s not all bad news for the development of digital assets within Indonesia. The country still ranks highly in terms of crypto adoption within the Asian region. Crypto was also floated as an election issue recently by Gibran Rakabuming Raka, a vice-presidential candidate in the upcoming election. The politician expressed his commitment to accelerating the country's position as a leader in the digital revolution. 

Taiwanese prosecutors have expanded their inquiry into ACE Exchange, urging the detention of Chenhuan Wang, the platform's president and partner at Chien Yeh Law Offices. The Taipei District Prosecutors Office disclosed to The Block that Wang, alongside four other suspects, was summoned after police raids in Northern Taiwan earlier this month. Subsequent to the interrogation, prosecutors sought Wang's detention and restrictions on visitation rights, alleging his involvement in money laundering and fraud linked to the activities orchestrated by the detained founder, David Pan. Chien Yeh Law Offices has moved to distance itself from its partner’s activities, stating that the matter is a personal investment of Wang’s. It stated:”Ace Digital Innovation Co., Ltd. is the personal external investment affairs of lawyer Wang Chenhuan and has nothing to do with the firm.”Photo by Thomas Tucker on UnsplashMisleading advertisingPan, along with colleague Lin Nan, is accused of a three-year collaboration, utilizing misleading social media advertisements to deceive investors into acquiring worthless cryptocurrencies, including MOCT. The inclusion of Wang in the investigation now requires a court determination on potential detention. ACE Exchange responded to Pan's arrest earlier, asserting that Pan had ceased daily operations in 2022, with Wang assuming the presidency in September 2023. Wang claimed to have initiated efforts to delist controversial coins, with ACE assuring cooperation with investigations as a witness. The exchange affirmed the normalcy of trading and operational conditions, emphasizing the security of user assets and smooth cryptocurrency and New Taiwan dollar deposit and withdrawal services. Established in 2018, ACE Exchange ranks among Taiwan's prominent crypto exchanges, alongside BitoGroup and MaiCoin. In spite of alleged wrongdoing relative to key actors within the business, the platform has outlined its commitment to legal principles, stating zero tolerance for any misconduct within its management team. Regulatory focus on offshore exchangesIn the broader context of Taiwan's crypto landscape, the Financial Supervisory Commission (FSC) plans to impose restrictions on offshore cryptocurrency exchanges operating within its jurisdiction, unless they secure required registration. In September last year, the FSC drafted guiding principles for virtual asset service providers (VASPs). These guidelines aim to fortify information disclosure, set review standards for virtual asset listing and delisting and ensure the secure separation of companies' and customers' assets. The FSC intends to strictly prohibit illegal business solicitation by foreign crypto firms, mandating registration and compliance declarations with anti-money laundering regulations. Failure to comply will result in the prohibition of business solicitation within Taiwan or from domestic residents by foreign VASPs. As Taiwanese prosecutors intensify their efforts, the ACE Exchange case unfolds as a critical episode in the evolving regulatory landscape, prompting both legal scrutiny and a reevaluation of the country's approach to crypto oversight.  

South Korea’s GDAC Suffers $13M hackSouth Korean cryptocurrency exchange, GDAC, has suffered a significant hacking incident that has resulted in the loss of approximately 23% of its custodial digital assets.©Pexels/PixabayThe hack occurred on Sunday when some of the exchange’s hot wallets were breached, and the stolen assets were transferred to an unidentified wallet. GDAC reported the incident on Monday and disclosed that the exchange lost over $13.1 million in Bitcoin, Ether, Wemix, and USDT, with more than $10 million in Wemix.According to blockchain analytics firm Arkham Intelligence, the hacker has since swapped the USDT for ETH, sending 461 ETH to cryptocurrency tumbler, Tornado Cash. The hacker used three separate wallets to take funds from two of the exchange’s hot wallets. Arkham has labeled the wallets as follows:GDAC Hacker 1: 0x244615D99684175d31369332039b2D84ce925EC5GDAC Hacker 2: 0x62B5eb2cb925Ce2898f9327B235b3228e7Cac1C2GDAC Hacker 3: 0x87597bDB421482190e223aCa0A4DEAd75AB0a98DGDAC deposits/withdrawals suspendedGDAC has suspended its withdrawal and deposit services and reported the incident to the Korea Internet and Security Agency and the Financial Intelligence Unit. The exchange has also requested other cryptocurrency exchanges to block incoming transactions from suspicious addresses.In a notice posted on its website, GDAC CEO Seunghwan Han apologized for the suspension of deposits/withdrawals and concern relative to the hack, adding that the firm will be working towards investor protection and safe withdrawal of funds in due course. GDAC also posted the breakdown of the digital asset quantities lost in the hack, with the hacker stealing 60.80 BTC, 350.5 ETH, 10,000 WEMIX and 220,000 USDT.Crypto hacks increasingThis hacking incident comes at a time when cryptocurrency hacks have been on the rise. According to blockchain analytics firm Chainalysis, illicit actors stole $3.8 billion worth of assets last year, the largest one-year loss in crypto’s history. In addition, other crypto platforms have also suffered notable hacks and exploits in the past 15 to 18 months. Axie Infinity’s Ronin bridge, for example, suffered a $625 million hack last year, and decentralized-finance protocol Sushi was exploited for $3.3 million on Sunday.GDAC is not the only South Korean cryptocurrency exchange to suffer a significant hacking incident. In 2018, Coinrail was hacked, resulting in the loss of approximately $40 million worth of assets, and in 2021, Upbit suffered a $50 million hack.In response to these incidents, South Korea has taken steps to tighten regulations around cryptocurrency exchanges. In March 2021, the country’s Financial Services Commission issued a revised regulation that requires cryptocurrency exchanges to maintain stricter anti-money laundering measures and report suspicious transactions.The GDAC hack is a stark reminder of the risks associated with cryptocurrency investing and the importance of implementing robust security measures. Investors and cryptocurrency exchanges should take note of this incident and ensure that they have adequate security measures in place to protect against potential hacks and exploits.