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Korean Experts Advocate for Global Crypto Info Exchange to Combat Tax EvasionIn a recent event held to discuss the tax regime in South Korea, law professors offered a suggestion to combat tax evasion associated with cryptocurrencies. They proposed the implementation of a global cryptocurrency information exchange system for more effective response measures.Kim Beom-jun, a professor at the University of Seoul Law School, and Kim Seok-hwan, a professor at Kangwon National University Law School, delved into this matter last Friday at the tax administration forum that took place at the Korea Federation of Small and Medium-sized Enterprises (KBIZ).Photo by Karolina Grabowska on PexelsRising crypto adoptionAccording to their report, the cryptocurrency market is currently facing challenges stemming from the Terra-Luna incident and the broader economic downturn caused by rising interest rates and inflation. However, it’s worth noting that in Korea alone, there are approximately 6.27 million cryptocurrency exchange users, with a collective market capitalization of around KRW 19.4 trillion ($14.6 billion). This suggests that cryptocurrencies continue to integrate into our everyday lives.Crypto tax starting in 2025Starting in 2025, South Korea is set to impose taxes on income from cryptocurrency trading. However, before the tax is put into effect, there is a pressing need for administrative enhancements aimed at preventing tax evasion involving cryptocurrencies. These initiatives encompass the development of crypto-tracking technology and the allocation of sufficient staff and budgets to enable tax authorities to effectively address crypto-related issues.Foreign exchanges and DeFi platformsDuring the forum, experts voiced concerns about the possibility of tax evasion through the use of overseas crypto exchanges and decentralized platforms.Tax specialists pointed out that it’s difficult to expect people to fully meet their tax obligations when they’re trading on international exchanges. They also emphasized the challenges in collecting accurate tax information from crypto users who report transactions in overseas financial accounts.OECD’s initiativeIn August 2022, the Organization for Economic Co-operation and Development (OECD) gave the greenlight to the Crypto-Asset Reporting Framework (CARF). This framework aims to standardize the reporting of tax information related to crypto-asset transactions and facilitate the automatic exchange of such information. During the forum, researchers proposed that in the future, if Korea decides to participate in the OECD’s CARF, it should not only establish a cooperative system between virtual asset service providers (VASPs) and regulatory authorities but also revisit and amend pertinent laws.Additionally, presenters at the forum underlined the necessity of obligating taxpayers to furnish essential tax information for effective virtual asset taxation. They also stressed the importance of implementing appropriate sanctions in cases where taxpayers fail to comply with these reporting requirements.Commissioner Kim Chang-ki of the National Tax Service (NTS) stated that the agency is committed to enhancing tax accountability and transparency. He added that the NTS will take strong measures against malicious tax evasion activities, especially those involving online platforms.Furthermore, Commissioner Kim mentioned that the tax agency is boosting its investigative capabilities using scientific methods to combat emerging forms of tax evasion, like those related to virtual assets. He also said the NTS is expanding its international collaboration and devising other measures.

Korean Crypto Exchange Alliance Reveals Standardized Regulation GuidelinesThe Digital Asset eXchagne Alliance (DAXA), consisting of five leading cryptocurrency exchanges in South Korea, today revealed standardized regulation guidelines, according to a report by news media The Asia Business Daily.Photo by Nick Fewings on UnsplashStandardized guidelinesTwo important documents — the standardized internal control framework and the code of conduct and ethics — were released by DAXA today. These documents were developed based on data provided by financial investment firms and member exchanges. Reviewed by DAXA members and advisors, this documentation represents a significant milestone as it is the first of its kind to address the unique characteristics of the crypto industry. The establishment of unified rules and regulations through the collaborative efforts of the member exchanges stands as a commendable achievement.Internal control frameworkThe internal control framework consists of five parts, encompassing a total of 68 articles. These parts cover general provisions; governance of virtual asset service providers (VASPs); organization and standards for internal control; compliance officers and internal control system management; and compliance details.Code of ethicsThe code of conduct and ethics comprises five chapters with 24 articles. These chapters focus on general provisions, customer ethics, employee ethics, corporate management ethics, and societal ethics.DAXA Vice Chairman Kim Jae-jin expressed optimism that these guidelines will serve as a valuable reference for all VASPs, fostering the development of a fair, trustworthy, and globally competitive crypto market.DAXA’s websiteLast month marked the launch of DAXA’s official website, and their YouTube channel has been active since January. The alliance is made up of five member exchanges: Gopax, Bithumb, Upbit, Korbit, and Coinone. At the helm of the alliance is Chairman Lee Sirgoo, who concurrently serves as CEO of Dunamu — the company operating Upbit, the largest cryptocurrency exchange in the nation.

First Digital to Introduce USD-Backed USD StablecoinFirst Digital Trust, a Hong Kong-based qualified custodian and trust company, is set to introduce a new stablecoin called “First Digital USD,” with the short-code $FDUSD. This stablecoin will be pegged to the US dollar but regulated within Asia.Photo by Alexander Grey on UnsplashIntroducing $FDUSDAccording to First Digital, $FDUSD will be backed by one US dollar or an asset of equivalent fair value on a one-to-one basis. The reserves supporting FDUSD will be held in segregated accounts at institutions in Asia.$FDUSD aims to provide stability and will be programmable, enabling the execution of financial contracts, escrow services, and insurance without the need for intermediaries. In a statement published on Thursday, First Digital emphasized its commitment to full compliance with current and future laws and regulations. The company also expressed its intention to participate in shaping the regulatory landscape for $FDUSD and First Digital itself.The announcement of $FDUSD is particularly significant in light of the new “Guidelines for Virtual Asset Trading Platform Operators” set to take effect in Hong Kong on June 1. These guidelines outline rules for safe asset custody, client asset segregation, conflict of interest avoidance, and cybersecurity standards, as mandated by Hong Kong’s Securities and Futures Commission (SFC).Hosted on BNB Smart ChainFDUSD will operate on the BNB Smart Chain and will be issued by First Digital Labs, a subsidiary of First Digital Trust, a regulated digital asset custodian under the Hong Kong Trustee Ordinance. The law ensures that $FDUSD will be fully backed by US dollar reserves or highly liquid, high-quality assets held in regulated Asian financial institutions, with no commingling with other assets of First Digital.Vincent Chok, CEO of First Digital, emphasized the company’s commitment to regulatory compliance and setting a new standard for legitimacy in the industry. First Digital intends to comply with all applicable laws and regulations and actively contribute to the shaping of regulatory regimes for $FDUSD and First Digital in the future.The $FDUSD stablecoin will be redeemable for US dollars, providing users with a reliable bridge between the digital and fiat currencies.Biden administration's own goalAs regulatory uncertainty persists in the United States, some industry players are expressing concerns about losing the country’s leadership position in the crypto sector. They warn that the industry may be offshore to more favorable jurisdictions.News of First Digital Trust’s US dollar stablecoin intentions brought scathing criticism of US policy from US commentators within the crypto space. Austin Campbell, Managing Partner at Zero Knowledge Consulting, a firm that advises on crypto payments and stablecoins, stated that the US government and US regulators had created a paradigm where they now have less control over distribution and regulation while the product they were suppressing continues to exist and scales elsewhere.Nic Carter, Partner at venture capital firm Castle Island Ventures, wrote that “the wise sages in US government took one look at the onshore registered stablecoin market and decided they’d much prefer unaccountable offshore crypto-eurodollars.”Macro-economist Luke Gromen described this consequence of US policy as the “monetary equivalent of deciding they would prefer making their goods in China rather than paying US workers and deal with union labor.” Meanwhile, Caitlin Long, Founder and CEO of digital asset-focused Custodia Bank, suggested that US federal regulators “thought they could kill USD stablecoins” but that “they miscalculated.”