Japan's FSA to Propose Exchange Regulation Program

Financial Services Agency created five criteria, that should be applied to all cryptocurrency exchanges, operating in Japan
07 May 2018   1096

The for Financial Services Agency of Japan (FSA) plans to tighten the requirements for local exchanges. According to Nikkei, this is done in order to reduce the risks of large-scale hacker attacks.

In January, the Coincheck exchange was hacked, as a result of which it lost more than $ 500 million in the cryptocurrency. After this incident, the FSA began active operations in the Japanese market.

At the same time, Japan adheres to an open approach to crypto-currencies and does not plan to impose a complete ban on trade, instead taking a number of steps aimed at protecting investors. To this end, the FSA has developed a program of actions to regulate the exchange of cryptocurrencies, consisting of five criteria.

First, the exchanges will be obliged to adhere to high security standards. These include the inadmissibility of storing assets on online wallet and two-factor authentication.

Secondly, the exchanges will have to strengthen measures to identify customers. This requirement is mainly aimed at combating money laundering.

Third, the FSA requires that exchanges follow the methodological guidelines for asset management. So, client assets should not overlap with the company's own assets. The balances on customers' accounts will be checked by exchanges on a daily basis, which should help them to fight the manipulation. In addition, regulators want the exchanges to use mechanisms that will not allow their employees to carry out transactions with their clients' assets.

Fourthly, the regulator insists on the withdrawal of certain crypto-currencies from the bidding. In particular, its attention was attracted to anonymous crypto-currencies, which can also be used for money laundering. Regulated sites with such cryptocurrency will not be allowed to operate.

Finally, the fifth criteria refers to the organizational structure of exchanges. FSA encourages trading platforms to transparency and clarity. For example, the regulator wants the exchanges to clearly share their shareholders and managers, as well as employees involved in software development and asset management. This is done to prevent insider trading and other forms of internal manipulation.

Commenting on the new program, the FSA source said that in the future the agency intends to adhere to a more objective approach to the regulation of exchanges.

It is expected that the new requirements will come into effect as soon as the FSA starts accepting new applications for the registration of exchanges. They also apply to existing sites.

Bithumb Filed Appeal Against Korean Tax Office

Looks like the korean exchange doesn't really want to pay an additional tax worth $67 000 000
16 January 2020   90

The South Korean cryptocurrency exchange Bithumb has filed a complaint against the National Tax Service (NTS) because of the requirement to pay additional taxes for the transactions of its foreign customers.

The company claims that cryptocurrencies do not have an official status in the territory of South Korea, which is why the authorities cannot have sufficient reasons to levy any taxes.

The tax court will have to decide within 90 days whether to retain or withdraw from Bithumb the obligation to pay the $ 69.1 million tax that was assigned to it by NTS in November. The Office declares that the withdrawal of income from accounts in Korean won by foreign residents is a taxable event. It is assumed that the exchange itself had to withhold tax from its foreign customers.

We paid the full amount and have since been preparing for arguments. We believe we will be given a chance to clarify our stance in court.

 

Bithumb

 The ministry has its own position on this issue.

Bitcoin under the current law is not an asset. It is clear and simple. The Ministry of Economy and Finance already made that clear. The NTS pushing ahead with the tax imposition is baseless and groundless, especially since it is still awaiting the ministry opinion on the same matter it sought again.

 

Choi Hwoa-in

Adviser to Financial Supervisory Service

According to the expert, the NTS maneuver is well thought out and aimed at starting to levy a tax on income that is currently not taxable.

We cannot comment on the ongoing matter. We will await the judgment from the Tax Tribunal.

 

NTS

Earlier, Bithumb was ordered to pay an additional $ 67 million in tax.