9 Oct, 2019

IRS Releases New Guides On Taxing Crypto Transactions

The state of crypto in South Korea has been a hot topic lately mostly because of the crypto laws which have toughened up over the past few months. The truth is that South Korean regulators seem to strongly favor blockchain over cryptocurrencies and many events have proven this hypothesis.According to local reports in the crypto news, as much as 97% of local digital assets exchanges are in danger of extinction. Meanwhile, local politicians and regulators have started lobbying a new set of regulations which could finally bring some clarity in this complex but crucial crypto market.Even though South Korean exchanges are permitted to trade Bitcoin (BTC) and other digital assets, most of the platforms seem to be in a fix. One recent closure of a local crypto exchange called Prixbit showed this when the exchange shut down in early August  “due to negative internal and external influences,” as the owners put it.Then, local press confirmed that excluding the four largest crypto players in South Korea – including Upbit, Bithumb, Coinone and Korbit (known as “the big four”) – could lead many small and mid-sized exchanges to a bad future.The new regulations also brought the topic of domestic cryptocurrency markets being required to share users’ transaction data with banks. Traders themselves can only use bank accounts in their legal name, matching the name on their trading account, as the latest cryptocurrency news show..

“Out of about six banks which set up such account system, only three decided to provide such account service to only big four exchanges,” said Park Jong-baek, a partner at the South Korean law firm BKL.

According to the lawyer, even though other exchanges in South Korea have been persistently asking banks to render that service for them, all proposals were rejected based on the assumption that transactions of cryptocurrencies even with real-name basis could be vulnerable to money laundering, terror or other illegal activities.”However, some exchanges in South Korea have managed to take advantage of the complex situation. One of them is Gopax – and a representative from the exchange said:

“Ironically, the lack of virtual accounts has helped in a roundabout way: the lack of such accounts allows GOPAX users to use whichever bank account they currently use for deposit and withdrawal purposes. In contrast, exchanges with virtual accounts require the user to have an account at a specific commercial bank to use them; as such, the lack of virtual accounts has served to increase the ease of use for GOPAX.”

Still, the spokesperson from the exchange said that it is “currently in discussion with several of the largest commercial banks in Korea.” 

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