Crypto Compliance and Taxation Outlook of the Asia - Espay Exchange

1
(No Transcript)
2
Introduction

• The dramatic increase of retail and institutional
  investor interest in the crypto markets has
  resulted in an unavoidable need to reposition the
  current financial regulatory platforms to
  integrate regulation of digital asset markets.
  Since the existing Bitcoin surge is above 10,000
  per bitcoin, it quite obvious that crypto markets
  have become easily accessible and significant to
  the public for supervisions to not intrude. 
• Currently, crypto markets are facing many crucial
  operational challenges, resulting in undermined
  investor confidence. Most recently, many
  significantly serious cybersecurity breaches,
  hackers infiltrating crypto markets and
  exchanges, have been widely reported on. Millions
  of dollars of virtual currency have also been
  stolen in recent years. Moreover, many crypto
  exchanges are reported to be involved in
  voracious and unreliable practices, insider
  abuses, and market manipulations. 
• According to recent research conducted by TIE,
  75 of crypto exchanges are reporting doubtful
  volumes. Hong Kong and Singapore have introduced
  new licensing compliance with a requirement to
  acquire approval from regulatory before trading
  is permitted. The assessment covers an evaluation
  of an exchange monitoring system which further
  includes market supervision for the
  identification of market abuse behavior, along
  with KYC (Know Your Customer), AML (Anti-Money
  Laundering), and CFT (Combating the Financing of
  Terrorism).

Asia
3
Introduction

• In Hong Kong, the Securities and Future
  Commission classifies ICOs as security, subject
  to the securities laws of the country.
  Cryptocurrency assets are treated no differently
  than any other regulated security assets. In
  Singapore, the Monetary Authority of Singapore
  (MAS) has issued several guidelines. These
  guidelines explain the ICO resembles capital
  market products regulation under the Securities
  and Future Act. Crypto platforms are subjected to
  a licensing acquiring regime and are limited to
  serve only accredited investors. 
• Similarly, other regions like China, South Korea,
  Taiwan, and the Philippines have issued different
  regulatory laws and guidelines for crypto
  exchanges and platforms. Some of them are
  comprehensively discussed in the following section

Asia
4
China

• All the activities concerning Cryptocurrency have
  received a little amount of tolerance from the
  government of China. ICOs were banned in China in
  September 2017. Exchange platforms trading
  cryptocurrencies were not allowed to continue
  with the ICOs. Many exchange platforms decided to
  relocate to jurisdictions that are permitting
  cryptocurrencies than China. 
• In China, it is legitimate to hold Bitcoins and
  other types of cryptocurrencies. Moreover, buying
  and selling are also legal in China. Here, the
  government also supports the applications and
  development of blockchain technology. They have
  also made it quite clear that this technology
  must service the actual economy of China.
•   
• In September 2017, government agencies of China
  issued the Notice related to the Prevention of
  Token offering and financing risks. The notice
  banned ICOs and ordered that any firm or
  individual who had previously conducted or
  completed an ICO for making arrangements
  including the return of token assets to the
  investors to guide investor rights.
• According to the Article-6 of PRC Criminal Law in
  China, if any illegal activities or consequences
  of such activities happen to occur in China, the
  crime is deemed to have occurred in Chinas
  territory.  

China
5
Policies For Exchange

• The issued by Government agencies of China
  ordered that any fundraising and traditional
  platforms must not provide exchange services
  between tokens, fiat currency, and virtual
  currencies. They are also not allowed to buy or
  sell tokens and virtual currencies, or buy or
  sell virtual currencies as a CCP (the central
  counterparty) or provide information intermediary
  or price determination services for virtual
  currencies or tokens. 
• As a result of this notice, many crypto exchanges
  shut down their platforms in China. Moreover,
  they made some significant adjustments to their
  business models. However, these improved business
  models are not completely safe from the criminal
  law perspective of China. Exchanges also
  continued their exchange business via platforms
  that were registered in foreign jurisdictions and
  were more biased to exchange business than
  China. 

6
Policies For Exchange

• According to the law of China, no individual
  willing to invest in white label crypto exchange
  software is allowed to use the internet to check
  the information that violates Chinese laws and
  regulations. Therefore, Chinese investors cannot
  buy or trade cryptocurrencies on overseas
  exchanges. 
• Trading Ban Yes
• Banking Ban yes
• Best Place for License No
• Tax Haven Region No

7
Japan

• Japans Financial Services Agency (FSA) has set
  up a few guidelines to divide ICOs and denote
  investment limits to guard investors, having
  initially permitted its crypto market to operate
  on a self-regulatory basis. In 2018, a
  cybersecurity breach stole around 530 million of
  Coincheck one of the biggest crypto exchanges
  of Japan. As a result, Japans Financial Services
  Agency has tightened regulations on crypto
  exchanges. This agency also introduced new
  screening requirements, along with a new
  licensing obligation. 
• Trading Ban No
• Banking Ban No
• Best Place for License Yes 
• Tax Haven Region No

Japan
8
Malaysia

• In this country, the government has positioned
  all the token assets under securities regulation
  and non-compliance is sanctioned with fines and
  up to 10 years of imprisonment. In the year 2019,
  the Securities Commission Malaysia permitted
  three organizations to set up and operate a
  digital asset exchange. 
• Trading Ban No
• Banking Ban No
• Best Place for License yes, easy process for
  licensing in Malaysia. Exchanger have to submit
  his investment documentation, provide evidence of
  sufficient investors protection, confirm the
  exchange has the capability to conduct due
  diligence of its clients, their activities, and
  meet the conditions within the framework of the
  disclosure mode of information of transactions
  participants.
• Tax Haven Region No

Malaysia
Malaysia
9
South Korea

• South Korea is one of the Worlds most famous
  markets for companies that are dealing with
  blockchain technology. In 2018, the KRW (Korean
  Won) was the extensively used currency for
  digital currency trading excluding the US dollar.
  And in 2017, more than 10 of Bitcoin trades
  across the entire world were conducted in KRW. 
• However, South Korea has still struggled to
  employ relevant regulatory and taxation measures
  for trading these currencies. The authorities of
  South Korea have altered their regulatory posture
  on several occasions, and the judiciary of Korea
  and financial regulatory agencies stay skewed in
  terms of setting up a cohesive regulatory stance.
• Despite the outbreak of regulatory events from
  distinctive agencies and the judiciary of South
  Korea, market participants are still expecting
  clear guidelines from the National Assembly in
  the form of a statue that will offer an inclusive
  regulatory outline. On 19th June 2018, the FSC
  stated that it would seek to place digital
  currency exchanges under an all-inclusive
  regulatory system. 

South Korea
10
South Korea

• Under this system, digital currency exchanges
  will need to register with a Financial
  Intelligence Unit of South Korea. It is a
  sub-organization of the FSC that has the job of
  monitoring transactional flows to reduce the
  risks related to money laundering or other sorts
  of attempts to dodge capital control measures.
  The centralized exchange solutions would require
  complying with KYC and anti-money laundering laws
  and regulations at levels similar to banks. The
  planned legislation is awaited before the
  National Assembly. In South Korea, there are also
  other pending bills related to digital currency
  trades and taxation measures. 
• Trading Ban No
• Banking Ban No
• Best Place for License yes, since it is worlds
  most popular market for companies dealing in
  Blockchain technology
• Tax Haven Region No

South Korea
11
Crypto Taxation Outlook in Asia

• In the year 2019, a lot of Asian countries have
  issued regulations and laws on crypto taxation,
  as regulators were starting to understand the
  significance of digital assets. Many investors
  also taken an interest in the project based on
  Cryptocurrency.
• In 2019, there was a major move for regulators of
  China when a Chinese court officially
  documented Bitcoin as a virtual property in July.
  Though China has yet to proclaim any precise
  rules or regulations for crypto taxation, many
  have that this regulating can urge the nations
  tax authorities to make a decision on a crypto
  taxation policy in the future. 
• The Inland Revenue Authority of Singapore (IRAS)
  also permitted a draft e-tax guide which
  recommended that cryptocurrencies that are
  proposed to operate as a medium of exchange are
  excused from the nations Goods and Service Tax
  from January 2020 and onwards.
• In addition to this, the Inland Revenue Authority
  of Singapore also discovered the stablecoins will
  be exempt from GST, or the value-added tax of the
  country, as well.

12
Crypto Taxation Outlook in Asia

• The Excise Department of Thailand has discovered
  that it will give its tax return practices a
  makeover by introducing a Blockchain-enabled tax
  return scheme by mid-2020.
• According to a representative from the
  department, oil exporters will be capable of
  paying excise tax and requesting tax returns once
  the fuel has been delivered, with Blockchain
  technology to help the branch with evaluating tax
  payments with the higher levels of
  effectiveness. 
• Nowadays, while oil exporters have definite
  documents for submission to waive their taxes,
  the superiority of examination for each case
  could be enhanced.
• Beyond Asian countries that are exempting or
  trying to put taxes on cryptocurrency, some of
  the most important crypto tax moves in 2020
  possibly the Philippines, Iran, and the United
  Arab Emirates amongst the others.

13
Final Thoughts

• Whether you are looking for a white label crypto
  exchange software development company or a
  centralized trading platform in Asia, you must
  know about compliance and taxation outlook. And
  we hope, this article will help you acquire a
  better understanding of compliance and taxation
  outlook in Asia.

14
Thank You
hello_at_espay.exchange
espay
Espay Exchange
Espayexchange