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South Korea Mulls Imposing Taxes on Cryptocurrency ICO

The South Korean government reportedly has plans to tax cryptocurrency and ICOs, despite the lack of a regulatory framework.

Cryptocurrency ICO Taxation Policy

According to The Korea Times, Hong Nam-Ki, Finance Minister nominee, revealed that the South Korean government is planning to tax cryptocurrency and initial coin offerings (ICO). Nam-Ki submitted his written answer before the South Korean National Assembly in response to a question based on taxation of digital currency.

The nominee further stated that the tax method for virtual currencies would be finalized in line with the taxation infrastructure and progress by global stakeholders. Furthermore, Nam-Ki said:

A task force consisting of experts from relevant government agencies including the National Tax Service and the private sector will be formed to examine overseas examples and hammer out the taxation plan.

With the current ICO ban in South Korea, the Finance Minister nominee said that the government would reach a definite stance on ICOs after studying various factors. These factors include market conditions, investor protection issues, and global trends.

Also, Nam-Ki said that results from the survey done by the financial regulatory market and experts would form the government’s orientation concerning ICOs.

The nominee, speaking on virtual currencies, described them as a phenomenon with no generally acceptable regulatory structure. With 2,000 digital currencies traded worldwide and 160 traded domestically, Nam-Ki called for caution when regulating the industry.

Hong Nam-Ki added that the government would nurture blockchain technology, citing that 90% of business fall under blockchain-related businesses. These businesses, excluding virtual currency exchanges, can be classified as venture companies.

Korean Cryptocurrency Exchanges Helpless in the Face of Chinese Influx

The South Korean market is receiving an influx of Chinese virtual currency exchanges. Major virtual currency exchanges like Binance, OkEx, and Huobi, have penetrated the Korean space.

OKEx recently announced its move into the South Korean market and Huobi initially declared it would enable traders to use the Korean won to trade cryptocurrency. Binance has also made moves to spread within the South Korean community. With the influx of these Chinese exchanges, however, local cryptocurrency exchanges are powerless.

The Korean government has been inconsistent in providing a regulatory framework the cryptocurrency industry. Towards the end of Q2 2018, the country declared that it would regulate digital currency exchanges, bringing some relief. However, less than a week after the announcement, the government deliberately postponed regulations.

The Korean cryptocurrency exchange community express growing concerns over the avalanche of Chinese exchanges into the country. Domestic cryptocurrency companies find it challenging to expand abroad because of money laundering concerns.

The Korea Bar Association recently urged the government to create laws that would develop the cryptocurrency industry in the country and improve investors’ protection.

Images courtesy of Shutterstock

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Cryptocurrency Trading is Illegal in Saudi Arabia

State officials in Saudi Arabia have reminded citizens that trading in cryptocurrency is illegal in the country. This reminder comes following the recent emergence of virtual currency trading promotions in the Arab nation.

No Cryptocurrency Trading License in Saudi Arabia

The Kingdom of Saudi Arabia recently reinforced its stance on the illegality of cryptocurrency trading in the country. In addition, the government created a standing committee headed by the Capital Market Authority to oversee the enforcement of the prohibition. Other members of the committee include representatives of the Ministry of Interior, the Ministry of Information, the Ministry of Trade and Investment, and the Saudi Arabian Monetary Agency (SAMA).

The standing committee debunked the claims made by some websites, saying:

The claims of these websites that they are authorized by official authorities in the kingdom are incorrect and that no parties or individuals are licensed for such practices.

The Risks Associated with Cryptocurrency Trading

The standing committee also warned Saudi Arabians about the risks involved with investing in digital currencies. The reasons given include volatility of the crypto market, potential scams, anonymity, and the presence of unenforceable or fictitious contracts. The committee also noted that cryptocurrency trading is outside the scope of government supervision and is also notorious for its use in illicit activities.

Currently, the committee is working with relevant bodies to reduce such marketing activities. This is not just for digital currency trading, as it also includes forex trading on sites not regulated by SAMA. For clarity purposes, investors should refer to the relevant government’s entity website for details of licensed entities.

Cryptocurrency Trading in the Arab World

In January 2018, ArabiaChain, a Dubai-based blockchain start-up, launched a new digital asset exchange, Palmex. This new platform allows users to deposit and trade digital coins including Bitcoin, Ethereum, DubaiCoin, and several others.The platform offers free registration but charges discounted fees on deposits, withdrawals, and trading.

In Egypt, the Grand Mufti, Sheikh Shawki Allam, endorsed a ban on digital currency trading, saying that it is fraudulent, cheating, and forbidden in Islam.

Blockchain Technology Adoption in Saudi Arabia

In February 2018, Saudi Arabian bank, Al Rajhi Bank, announced that it had run a successful trial using Ripple technology. This trial involved using Ripple technology to transfer money from Saudi Arabia and Jordan between bank branches. Still, in February, the Central Bank of Saudi Arabia signed an agreement with Ripple to help banks in the kingdom improve payments infrastructure using xCurrent. Saudi Arabia’s SAMA is the first ever central bank to use this program. On July 11, 2018, it was reported that the municipality of Riyadh, had partnered with IBM. The purpose of this partnership was to execute a series of blockchain technologies in diverse administrative and economic areas.

What do you think about the state of the Saudi Arabian cryptocurrency market? Let us know your thoughts in the comment section below.

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Bitcoin Prices Will go Even Higher Once Regulations Become Clearer, Says Market Analyst

Ryan Rabaglia isn’t ready to stop being bullish about Bitcoin any time soon. The Octagon Strategy trader believes that the top-ranked cryptocurrency can still hit new highs. BTC prices have risen above $6,500 after twice dropping below $6,000 in June 2018.

Regulatory Certainty Will Take Pressure off Bitcoin

In a recent interview with CNBC, Rabaglia declared that clearer market regulations were the likely catalyst for a sustained Bitcoin price rally. According to Rabaglia, regulatory uncertainty was putting immense pressure on the market. He also said that mainstream investors were reticent on committing fully to the market since the laws guiding crypto commerce are still somewhat vague. Rabaglia went on to call for regulatory clarity, saying:

Once we actually establish that regulation, the professional players that are going to be entering the market and that have already going to continue and they’re going to get that support from the regulatory environment that they have been looking for.

Despite the struggles of Bitcoin and the cryptocurrency market in general in 2018, Rabaglia remains bullish saying:

There is still a lot of growth to [sic] sort of get through and to go through. That there are going to be a lot of obstacles in something so young and immature. But yes, we are still bullish, and we are still upgrading this space in a bullish manner.

The Octagon Strategy trader reiterated the fact that cryptocurrency is still in its infancy, saying:

Year-over-year we are up well over a hundred percent still, and the markets are still in a growth phase, which I know a lot of people have been saying and have said and will probably continue to say – you have to be reminded that the industry is still only eight years old.

A Temporary Relief Rally

In another development, David Garrity, the CEO of GVA Research believes the current BTC price surge is a temporary relief. Speaking to Bloomberg recently, Garrity opined that trading levels had come under pressure in the market. Thus, a “relief rally” was inevitable.

Garrity also pointed to the emergence of some positive regulatory developments as the reason the current BTC price surge. According to the GVA Research CEO, recent comments by the SEC concerning the status of Bitcoin and Ethereum, in particular, have taken away some of the negative sentiment among retail investors in the market.

Unlike Rabaglia, Garrity identified end-user adoption as the critical parameter that will drive any sustained BTC price rally. He decried that lack of significant Bitcoin use cases especially in the payments market. In addition to slow adoption, Garrity mentioned a large number of government investigations into activities in the market as another reason for the price struggles of 2018.

Do you agree that clearer regulations will positively impact the price of BTC? How far will BTC rise before it finds a new bottom? Let us know in the comment section below

Image courtesy of Octfinancial, CoinMarketCap, and Bloomberg.

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Mike Novogratz: DOJ’s Bitcoin Investigation is a ‘Good Thing’

One of the most important hedge fund managers and billionaire investor, Michael Novogratz, said that the investigation that is being carried out by the U.S. Department of Justice (DOJ) is a ‘good thing’ for the cryptocurrency market.

Novogratz Supports DOJ’s Bitcoin Manipulation Probe

It is important to understand that the U.S. Department of Justice decided to open an investigation that will analyse whether crypto traders have been manipulating the price of Bitcoin or not.

Something that could look like a bearish information for some enthusiasts, for some experts it is a good thing. This is what Mike Novogratz, Cameron Winklevoss, and Thomas Lee believe.

During an interview with Bloomberg, Mr. Novogratz, founder of the crypto bank Galaxy Digital, explained:

“Weeding out the bad actors is a good thing, not a bad thing for the health of the market. Plenty of exchanges have these inflated volume numbers to create some sense of excitement around coins.”

During the last year, several virtual currencies have been marked as manipulated after being pumped & and dumped in different periods of time. There are hundreds of pump & dump groups that modify the normal market trend of some low-volume cryptocurrencies.

As the virtual currency market is highly unregulated, these situations may continue to happen in the future in various exchanges if regulations are not implemented.

Cameron Winklevoss and Thomas Lee Agree With Novogratz

There are other figures in the cryptocurrency world that have also supported Mike Novogratz’s comments about DOJ’s decision to investigate virtual currencies. Cameron Winklevoss, co-founder of the cryptocurrency exchange Gemini, said that these regulations are welcomed by the market if they help deter bad actors.

Most of the cryptocurrency-related companies are searching for regulations that would bring legitimacy to the market. A field without regulation and with an important number of scams may not be able to prosper and grow. Investors will not have the necessary confidence to place their money in the game. And this is certainly not what cryptocurrency believers want.

In a similar way, Thomas Lee, co-founder of Fundstrat Global Advisors, wrote in an email to Bloomberg that these regulations are welcome news because they mean that there is ‘adult supervision coming/here.’

Tom Lee has predicted that Bitcoin will reach $25,000 dollars by the end of the year, even when the most important currency lost 25% of its price since the first week of May. Additionally, he explained that after the Consensus conference the price of Bitcoin should increase – something that did not happen until now.

At the moment of writing this article, Bitcoin (BTC) is being traded over $7,500 dollars and has registered an increase in the last 24 hours of 0.67%, according to CoinMarketCap. Other virtual currencies like Ether (ETH), Ripple (XRP), and Litecoin (LTC), are operating positively as well.

The virtual currency market needs regulations that will allow it to properly grow. It is important to have a framework that would let innovation to flourish but protecting investors from scammers and illicit activities. Institutional investors are slowly entering the market, and as soon as there will be more friendly regulations, the results will be even better.

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