Koscom strengthens ties with brokerages to boost security token platforms

In a widening crackdown on overseas crypto exchanges operating illegally in India, the Financial Intelligence Unit (FIU) has issued “compliance show-cause” notices to some of the leading global crypto platforms. In a statement published by the FIU on Thursday, the agency outlined that it has issued compliance show-cause notices to nine offshore virtual digital assets service providers. These include Bitfinex, Bittrex, Binance, Bitstamp, Gate.io, Huobi, Kraken, Kucoin and MEXC Global.Photo by Naveed Ahmed on UnsplashRequest to block URLsThe FIU has also called on the information ministry to block the URLs of these entities, citing their non-compliance with Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) frameworks. The FIU is a national agency tasked with receiving, analyzing and disseminating information to enforcement agencies where suspect financial transactions are concerned. The move comes as part of India’s broader efforts to tighten oversight of the digital asset sector. Earlier this year, the government imposed money-laundering provisions on the crypto industry, aligning its regulations with those of other nations. In 2022, local crypto exchanges were dealt a significant blow with the introduction of a transaction tax, leading to a sharp decline in trading volumes. Unregistered platformsAccording to the FIU statement, offshore entities, despite serving a substantial number of Indian users, were operating without proper registration under AML and CFT frameworks. To address this, the FIU issued show-cause notices — a formal request for entities to demonstrate compliance with Indian laws when suspected of misconduct. It emerged earlier this month that in excess of 28 crypto platforms had registered with the FIU. Those compliant platforms were largely native Indian businesses. If the FIU’s recommendation is followed and in due course, URL access to the cited overseas exchanges is blocked, this could potentially be a boon for complaint platforms like WazirX, CoinDCX and ZebPay, at least in the short term. India’s actions against Binance, in particular, are not new. In 2021, the country’s anti-money laundering agency was reportedly investigating Binance’s potential involvement in a case related to betting apps. Binance, the world’s largest crypto exchange, has faced increasing regulatory pressure globally. In November, the company agreed to a $4.3 billion settlement, pleading guilty to anti-money laundering and U.S. sanction violations. As part of the settlement, CEO Changpeng Zhao agreed to step down. Community reactionNews of this development has caused some disquiet among Indian crypto advocates. However, taking to social media, Web3 marketer Abhinav Kumar wrote: “This isn’t a sign that crypto trading is suddenly going to be banned. . . . It’s a routine thing. The government wants to make sure foreign companies play by the same rules as Indian ones. That’s fair enough! Also remember India has over 20 million crypto investors now.” Leading crypto adoptionDespite regulatory challenges, India has emerged as a significant player in the global crypto market. Chainalysis’ 2022 global crypto adoption index ranked India as the top country by raw estimated transaction volume, second only to the United States. Responding to the growing crypto adoption, India is actively working on a regulatory framework based on joint recommendations from the International Monetary Fund and the Financial Stability Board. The government’s actions underscore its commitment to ensuring compliance within the crypto sector and aligning with international standards.  

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. 

Bithumb to Launch Entrepreneurship Support ProgramSouth Korean cryptocurrency exchange Bithumb announced on Wednesday (local time) the launch of an entrepreneurship support program to commemorate its upcoming 10th anniversary. The initiative aims to discover and nurture promising young entrepreneurs with innovative ideas to grow the industry and drive business augmentation. It is divided into two parts: an entrepreneurship competition and an investment of KRW 30 billion (approximately $22 million) to support early-stage startups.“It is time for us to support startups and bring them one step closer to success,” said the exchange’s CEO Lee Jae-won.Photo by Hunters Race on UnsplashProgram detailsThe entrepreneurship competition is open to individuals, groups, and small and medium-sized enterprises (SMEs) based in Korea that are planning to start a business or have been in operation for less than three years. Participants in any and all fields of business are eligible to enter. It offers startup grants of KRW 100 million ($74,000) for one first-place winner, KRW 70 million for three second-place winners, and KRW 30 million for six third-place winners. Winners will also receive investor relations (IR) consultations and marketing opportunities to attract future investments.Meanwhile, the KRW 30 billion investment project is open to local startups in any field that have been in operation for less than three years. Evaluators will place emphasis on how innovative or profitable the businesses are deemed, Bithumb said.“Our entrepreneurship support program is not limited to one-time support. We will strive to contribute to society by supporting entrepreneurship in various fields — not just the crypto industry — for sustained mutual growth,” Lee added.Application process datesThe application period is from November 1 to 30, and the results of the first round of applications will be announced on January 4. Those who pass the first round will be called in for an on-site evaluation. The final pool of applicants chosen for participation and investment will be announced in February.