Turkey considers limited tax on crypto transactions, not profits

The recent 19b-4 approval of spot Ethereum exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) is putting pressure on South Korean financial regulators to revisit their policies on digital assets. The SEC's decision to allow ETFs for Ethereum, the world's second-largest cryptocurrency, on May 24, 2024, follows its earlier endorsement of Bitcoin ETFs in January 2024. This move is seen as a significant step in merging traditional finance with the digital asset sector.Photo by DrawKit Illustrations on UnsplashKorean regulatory cautionIn contrast to the progressive stance in the U.S., the Korean Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) have maintained a cautious approach regarding the integration of crypto assets into traditional securities markets. According to current regulations under the Capital Markets Act, ETFs in Korea are limited to traditional underlying assets such as financial instruments, securities, international currencies and commodities. These foundations are crucial for the creation of financial derivatives, leaving little room for digital assets under current laws. Calls for regulatory reforms and market implicationsThe decision by the SEC is expected to influence the Korean regulators to update their views on digital assets, according to local media and industry experts. Jung Eui-jung, the head of the Korean Stockholders’ Alliance, has advocated for Korea to emulate the U.S. by approving Bitcoin and Ethereum ETFs. He expressed concerns that continued regulatory hesitance could lead to investor funds migrating to more progressive markets like the U.S., potentially positioning the U.S. to broaden its crypto market further. Xangle, a digital currency data provider in Seoul, has also criticized the current regulations as outdated, emphasizing the need for revisions to accommodate the increasing relevance of digital assets in global finance. 

India’s CoinSwitch Trims Workforce Amid Market DownturnIn the wake of an extended cryptocurrency market downturn, India’s CoinSwitch, a crypto investing app, has become the latest platform to downsize its staff, as reported by local news agency Moneycontrol on Monday.Photo by Kelli McClintock on UnsplashCustomer support cutsThe exchange has reportedly let 44 employees go from its customer support division this month, attributing the move to redundant roles caused by the bear market’s decline in customer queries.In a statement, CoinSwitch explained: “We continuously evaluate our business to stay competitive, prioritizing innovation, value, and service for our customers. To that end, we right-sized our customer support team to align with the present volume of customer queries on our platform.”The company noted that this decision led to the voluntary resignation of 44 members from its support team, following detailed discussions with their managers. The 44 employees represent a significant portion — approximately 8% — of CoinSwitch’s total workforce. The company’s LinkedIn profile currently indicates that it has 519 employees.Following local industry trendCoinSwitch’s staff reduction news emerged barely a week after another prominent local exchange, CoinDCX, downsized its workforce by 12%, based on an overall headcount of around 730 employees (according to LinkedIn data).The fact that both businesses have taken the decision to cut staffing is indicative of an overall market downtrend currently. That said, CoinSwitch had onboarded 60 people since April, which would imply that the firm is expanding in other areas despite these customer service-related layoffs.This may reflect the company’s plan to change strategic direction. Going forward, CoinSwitch intends to diversify its product offering and transition towards becoming a wealth tech platform.CoinDCX layoffsCoinDCX’s Co-Founders, Sumit Gupta and Neeraj Khandelwal, stated last week that they were making what was a very difficult decision to reduce the size of the team by 12% and that they regretted that talented team members would be moving on from the organization. The founders attributed the decision to market challenges and also pointed out the impact of the 1% Tax Deducted at Source (TDS) applied to local crypto exchanges. They clarified:“These factors had a significant impact on our volumes and thus revenues. To adapt, we undertook several proactive measures, including direct cost optimization and investment in automation to drive efficiency and productivity.”According to the announcement, the affected CoinDCX employees will receive a support package including severance pay equivalent to their full notice period, an additional month of salary, extension of health insurance, and other forms of assistance.CoinSwitch was founded by Ashish Singhal, Govind Soni, and Vimal Sagar Tiwari in 2017. The company received the backing of leading venture capital firms such as Andreessen Horowitz (a16z), Sequoia Capital, Tiger Global, Paradigm, Coinbase Ventures, and Ribbit Capital. In 2021 it was recognized as India’s second crypto firm to reach unicorn status, following a $260 million Series C funding round that saw the company reach a valuation of $1.9 billion.In 2022 India introduced a 30% tax on cryptocurrency gains, resulting in the exodus of numerous cryptocurrency service providers and a steep decline in crypto trading activity. The country has also implemented a 1% TDS for crypto exchanges, mandating that exchanges pay 1% on all crypto asset transfers.

Korean Survey: High Hopes for New Tech, Less for Blockchain and MetaverseA survey report on the perceptions and acceptance of evolving technology among the South Korean public was released yesterday by the Korea Communications Commission (KCC) in collaboration with the Korea Information Society Development Institute (KISDI). The survey, conducted from October 5, 2022, to January 13, 2023, involved 5,378 smartphone users who accessed the Internet at least once a day.Photo by Алекс Арцибашев on UnsplashTech toolsThe report titled “The 2022 User Panel Survey on Intelligent Information Society” revealed that Korean individuals generally hold high expectations for technological tools. Among the respondents, 89.3% expressed their belief that robots would enhance our lives, making it the most anticipated technology. This was closely followed by autonomous driving (87.8%) and kiosks (87.6%). On the other hand, blockchain and AR/VR were slightly less popular, with 73.4% and 72.4% of respondents showing interest, respectively. AR/VR stands for augmented reality and virtual reality.Information servicesThere was also significant anticipation for advanced information services among the respondents. Algorithm-based content recommendations garnered approval from 86.9% of participants, while artificial intelligence-based healthcare received support from 86.5%. However, metaverse-related services received a more moderate level of enthusiasm, with approximately 66% of respondents expressing interest.Metaverse usageThe survey also delved into the usage of metaverse platforms among respondents, revealing that only 12.7% had prior experience with such platforms. This finding suggests that the level of metaverse usage remains relatively low. Among the metaverse-experienced respondents, the most popular platform was ZEPETO, which accounted for 39.4% of usage. On average, users spent 1 hour and 4 minutes on the platform daily. ZEPETO is a Korean communication service that allows users to create and interact as 3D avatars in a virtual world. The cyberspace platform is operated by NAVER Z, an affiliate of the nation’s search engine giant NAVER Corp.Regarding the activities conducted on metaverse platforms, 77.9% of users stated that they primarily utilized them for gaming purposes. This was followed by “communicating with friends” (67.8%) and “communicating with strangers” (66.6%).When discussing the advantages of the metaverse, respondents highlighted its ability to transcend physical and temporal limitations, with 65.7% and 62.6% mentioning “less constraint by time” and “less constraint by space,” respectively. Additionally, 60.1% of respondents mentioned the metaverse’s capacity for self-expression as a benefit. However, respondents also expressed concerns about the metaverse, including risks such as sex offenses (65.7%), personal data infringement (62.6%), hacking (60.1%), and addiction (57.8%).