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Thailand Targets New Crypto Taxes While Others Move to Ease Burdens

An increasing number of countries are looking at the cryptocurrency space, with three national governments launching efforts to regulate and examine projects in the last two weeks. – with a particular focus on tax policy.

As might be expected, some jurisdictions – especially in the Asian market – have moved to clarify the rules that crypto-traders must follow when reporting their gains or losses. And while some of those are in the earliest stages, the developments suggest that government officials want to clear the air of any doubt that may be felt by those working in the space – and who might bring their business to those areas.

To that end, some governments are looking to actually clear the runway, as it were, for companies looking to exchange or trade cryptocurrencies. Part of that involves reducing the tax burden for such companies, with the implicit hope that they’ll set up shop in those countries.

Even still, it may be some time before those rules get clarified – at least until next tax season.

Thai taxes take shape

Thailand is on the cusp of implementing a 7% value-added tax (VAT) and a 15% capital gains tax on cryptocurrency transactions – a move that is coupled with new regulations on exchanges that handle the trade of such assets.

Last week, Thailand’s Ministry of Finance noted it was moving ahead with the bill despite a request from the Thai Blockchain Association to relieve some of the tax burdens that will be placed on the community.

The bill will also require exchanges to institute more stringent know-your-customer (KYC) procedures and collect identification data for all their users.

Special zone in the Philippines

The government in the Philippines is taking what you might call the opposite approach.

Officials have announced that they would allow 10 cryptocurrency startups to launch operations in a special economic zone that offers lower tax tiers.

The startups will include miners, ICO platforms, and exchanges. But they aren’t just being offered a red carpet – they’ll be required to invest in the nation’s economy over the next two years. The $1 million investment will come on top of a $100,000 licensing fee, Reuters reported.

The startups will also still be restricted to some degree and will be forced to handle all fiat conversations offshore to avoid violating the nation’s laws.

Feedback for Abu Dhabi

In a less binding move, the Abu Dhabi Global Market’s Financial Services Regulatory Authority released their proposed rules on cryptocurrency trading.

There’s no policy set in stone, though. Right now, the agency is looking for feedback from industry members on the framework.

Among other stipulations, the framework outlines anti-money laundering, counter-terrorist financing, consumer protection, technology governance and safe custody rules. Spot crypto assets are also included in the proposed framework.

Mining cease-and-desist

Past tax considerations, state regulators in the U.S. continue to crack down on what they allege are fraudulent schemes targeting would-be investors.

North Carolina’s Secretary of State Securities Division has issued a permanent cease-and-desist against PowerMining Pool, following a temporary order which was sent out in early March.

The regulator alleged that PowerMining Pool violated the state’s Securities Act and using dangerous sales tactics when it was allegedly selling shares in bitcoin to help it mine one of several cryptocurrencies.

In its permanent order, the regulator noted that the company’s website had gone down and that it did not respond to the temporary order.

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Abu Dhabi Markets Watchdog Mulls Cryptocurrency Exchange Regulations

Abu Dhabi’s markets regulator is considering drawing up a supervisory framework for cryptocurrency exchange operations.

In an announcement, the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market said it is “reviewing and considering the development of a robust, risk-appropriate regulatory framework to regulate and supervise activities of virtual currency exchanges and intermediaries.”

The FSRA said the move would be an addition to guidance it issued in October 2017 regarding a regulatory approach towards token-based fundraising activities such as initial coin offerings.

Given the rising popularity of cryptocurrencies in the region, the FSRA said then that would apply existing anti-money laundering and know-your-customer (KYC) rules to token sales, classifying some as securities and others as commodities.

The FSRA now notes with concern the issues of cryptocurrencies being used in money laundering and terrorist financing, as well as the risk of cyberattacks. Like its counterparts in other countries and regions such as Japan, the EU and Singapore, the FSRA said it’s also exploring a framework to supervise cryptocurrency exchanges regarding these risks.

According to the statement, the agency does plan to include advisory input from industry companies and relevant professional bodies.

The FSRA further cautions that before the regulatory framework is in place, investors and exchanges are advised to approach the agency for discussion on proper treatment of cryptocurrency transactions.

The news comes just a week after the United Arab Emirates’ securities regulator issued a warning to residents on the risk of investing in token-based fundraising activities.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

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Abu Dhabi Admits 4 Blockchain Startups to Fintech Sandbox

The Abu Dhabi Global Market (ADGM) – the city’s international financial free zone within the UAE – has admitted a second batch of fintech startups to its Regulatory Laboratory (RegLab).

With the move, the 11 local and international fintech firms will work under the framework of the Financial Services Regulatory Authority (FSRA), one of three independent authorities of the ADGM, to develop and test their products within a controlled “sandbox” environment.

The latest batch of startups – including blockchain firms EquiChain and OKLink, both based in the U.K.; UAE-based Pyppl; and Canadian firm Remitr – were selected from over 20 applications from various countries, according to a press release.

Richard Teng, CEO of the FSRA, said that the second phase was encouraged by “overwhelming positive response from the global fintech industry in the first year of the RegLab programme.”

He continued:

“We are already seeing some great results from the first cohort, and are looking forward to seeing results from the second, which include fascinating projects such as an initial coin offering and blockchain-enabled payments, settlements and RegTech solutions, among others.”

With a total of 16 startups now within RegLab, including five from the first batch, ADGM said it is seeking to expand its team to better serve the financial services industry and the country’s economy.

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Abu Dhabi Markets Regulator Publishes ICO Guidance

The government of Abu Dhabi has released new guidelines for those looking to organize or participate in an initial coin offering (ICO).

Abu Dhabi Global Market’s Financial Services Regulatory Authority (FSRA) said that it would apply existing anti-money laundering and know-your-customer (KYC) rules to token sales, classifying some as securities (depending on their makeup and underlying structure) and others as commodities. Like a growing number of regulators worldwide, the agency said that it would weigh the sale and release of blockchain-based tokens on a case-by-case basis.

The nine-page circular published yesterday includes instances in which a token sale would fall under or outside the definition of a security under Abu Dhabi law. Because the circumstances of such a determination may vary from project to project, the agency urged organizers within the region to “engage with us as early as possible in the fundraising process.”

Richard Teng, the chief executive director of the FSRA, later said in a statement:

“Participants exploring the issuance of ICOs that offer real value to the market and wish to operate within our regulatory framework are encouraged to engage us early to gain insights into the applicable regulatory regime.”

Tokens which are not treated as securities will be treated as commodities, along with cryptocurrencies more generally. As a result, their trades will not be regulated by the FSRA, according to the circular. That specific determination notably brings the FSRA in line with the Commodity Futures Trading Commission, which revealed that it would regulate the US-based market in late 2015.

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