South Korean crypto-only exchanges on the brink of closure

The Hong Kong Securities and Futures Commission (SFC) announced plans to conduct on-site inspections of local virtual asset trading platforms (VATPs) that are still in the process of regulatory applications after the June 1 licensing deadline. The SFC has emphasized that starting from June, all local crypto trading platforms must either possess a license or be deemed-to-be-licensed to operate legally. Operating an unlicensed VATP post-deadline will be considered a criminal offense, with the SFC actively pursuing compliance.Photo by farfar on UnsplashFocus on compliance and market adjustmentsThe inspections aim to ensure adherence to regulatory standards, particularly in safeguarding client assets and executing Know Your Customer (KYC) processes. The SFC has advised investors to only engage with licensed platforms and cautioned unlicensed companies against marketing their services or accepting new retail clients. Amidst these regulatory changes, the number of license-seeking crypto exchanges has declined. Notably, 11 firms, including OKX and Huobi's local branch, have retracted their licensing applications, leaving 18 still pending. Meanwhile, Gate.HK has halted certain operations in anticipation of meeting the new regulatory demands. To date, only two companies, OSL Digital Securities Limited and Hash Blockchain Limited, have secured a license to operate under the new framework in Hong Kong. 

Hana Bank Enables Korean Art Collectors to Prove Ownership with NFTsHana Bank, one of South Korea’s largest banks, has announced a partnership with Trackchain, a Korean blockchain firm, to enhance digital art banking services based on Web3 technology, according to a press release.Photo by Debby Hudson on UnsplashArt banking and NFTsThe collaboration aims to develop and operate a platform that promotes art banking services, including the exhibition, advertisement, and distribution of artworks. Furthermore, the two entities will create non-fungible tokens (NFTs) to verify the ownership of artworks and introduce artwork custody products. They will also explore and construct business models that integrate finance and blockchain technology.Bank’s custody serviceHana Bank, recognized as a leader in art banking, has already established a comprehensive custody service that ensures secure management, storage, and liquidation of art collections. Through this partnership, Hana Bank plans to refine NFT technology, which will provide transaction history and ownership verification for artworks. The objective is to enhance transparency and convenience for art collectors during the trading process.Visitors who purchase artworks by Artist Cho Sung-hee at an exhibition hall in Gangnam, Seoul, and choose to store them in Hana Bank’s custody will receive NFTs issued by Trackchain. These NFTs serve as proof of ownership, authenticating the artworks. Cho Sung-hee is known for her collage works created with Korea’s traditional hanji paper, made from laminated sheets. The exhibition will run from July 4 to 28.Additionally, purchasers of the displayed artworks will receive Cho’s digital art NFTs. Meanwhile, customers who use Hana Bank’s mobile app, Hana 1Q, to create their own artworks will earn corresponding NFTs.Kim Young-hun, Head of Hana Bank’s Wealth Management Unit, expressed enthusiasm about their Web3-based art banking service, emphasizing that it will facilitate easier art purchases and provide enhanced security for managing art collections. Kim also stated that the bank intends to expand its services further to deliver exceptional cultural experiences.

Japan’s New Tax Amendment Sparks Optimism for Crypto IndustryJapan’s National Tax Agency has recently announced a revision to corporate taxation rules regarding crypto assets, according to a report by local media outlet Coinpost. The amendment states the exemption of companies from taxes on unrealized gains with cryptocurrencies.Photo by Nataliya Vaitkevich on PexelsPrevious tax burden on crypto profitsPreviously, corporate tax at a rate of approximately 30% was imposed on profits from cryptocurrency holdings, including unrealized gains, as per the Japan Times. This regulation has been criticized for burdening companies and impeding innovation in the blockchain industry. In response, some companies had opted to conduct their business operations overseas. However, with the new amendment, the rules have been relaxed for virtual assets issued and held by their companies.Two conditions for tax exemptionThe National Tax Agency clarified the two conditions under which virtual assets issued by a company would be exempt from taxation. Firstly, the crypto asset must have been issued by the company and continuously held since its issuance. Secondly, the virtual asset must have remained under continuous transfer restrictions since its issuance, which can be achieved through either implementing technical measures to prevent the transfer to other parties or holding the assets in a trust that meets specific requirements.This revision in corporate taxation rules is expected to provide relief for businesses in Japan that deal with cryptocurrencies and encourage innovation in the domestic blockchain industry. The relaxation of taxes on unrealized gains may also incentivize companies to keep their operations within the country rather than seeking alternatives abroad.