There are some major regulatory developments in the crypto space, which have developed this week. Not only Germany, who has passed a bill that allows banks to sell and store cryptocurrencies, but South Korea and Thailand are also amending their laws to better regulate the crypto industry.
German Bill Empowers Banks to Deal in Crypto
It has been analyzed that a bill has reportedly been passed in Germany allowing banks to sell and store cryptocurrencies for customers. Starting in 2020, financial institutions in Germany will be able to offer cryptocurrencies, including Bitcoin, alongside traditional investments such as stocks and bonds.
They can also provide crypto custody services to customers. However, the bill proposes eliminating the requirement for banks to use third-party custodians to manage cryptocurrencies.
So, currently, banks are required to use “external custodians or special subsidiaries” to store cryptocurrencies. They will need to produce a license to offer crypto services.
In the meantime, banks in Germany have increasingly been passing on the burden of negative interest rates to their retail and corporate clients.
A recent survey by the Deutsche Bundesbank, the country’s central bank, shows that 58% of surveyed banks are already charging some clients negative interest rates.
Creation Of Legal Framework In South Korea
It has been analyzed that cryptocurrency businesses will also soon be directly regulated in South Korea, as a new bill passed by the South Korean National Assembly’s national policy committee will bring crypto exchanges directly under the supervision of the Financial Services Commission’s Financial Intelligence Unit (FIU).
However, the bill amends the Act on Reporting and Using Specified Financial Transaction Information to establish a legal framework for cryptocurrencies by classifying them as ‘digital assets’.
Among other obligations, the bill requires crypto exchanges to register with the FIU and establish a system that complies with the standards set by the Financial Action Task Force (FATF).
Thailand Turns Up To Become More Crypto-Friendly
Another Asian country, Thailand, is planning to amend its cryptocurrency regulation. The existing Thai crypto regulation went into effect in May 2018, which installs the Securities and Exchange Commission (SEC) as the main regulator of the industry.
Likewise, on November 25, Ruenvadee Suwanmongkol, the Secretary-General of SEC, reportedly said that the regulator is studying whether the current regulation has any areas that impeding the growth of the digital asset industry.
“The regulator must be flexible to apply the rules and regulations in line with the market environment.”Ruenvadee Suwanmongkol
“Laws should not be outdated and should serve market needs, especially for new digital asset products, and be competitive with the global market. We need to explore any possible obstacles.”Ruenvadee Suwanmongkol
Similarly, under current laws, sellers and promoters of unauthorized digital tokens will be fined up to twice the value of the transactions or at least 500,000 baht ($16,534). They could also face a jail term of up to two years.
Furthermore, crypto traders will be liable for a 7% value-added tax (VAT) and a 15% withholding tax on capital gains. However, retail investors will be exempt from VAT if they trade crypto assets through authorized exchanges.
The Arrest Of Virgil Griffith
So, this week, the US Government has taken two notable actions that affect the crypto industry.
Firstly, the arrest of Virgil Griffith, a 36-year-old well-known member of the crypto community who worked with the Ethereum Foundation, has resulted in outrage across the crypto community. The Federal Bureau of Investigation (FBI) alleges that the American citizen, who is a resident of Singapore, violated the International Emergency Economic Powers Act (IEEPA) by teaching North Koreans to evade sanctions. He is charged with conspiring to violate the IEEPA, which carries a maximum term of 20 years in prison.
And secondly, the Western District of Washington court has denied a motion to quash an IRS summons for a crypto trader’s Bitstamp transaction data. The judge ruled that “the IRS’ request for those records does not infringe upon the petitioner’s Fourth Amendment rights.”
The Report Of China
After the blockchain hype that was initiated by Xi Jinping, the President of China, and a subsequent announcement by the People’s Bank of China (PBOC), the central bank’s Shanghai Head Office, published a financial stability report for 2019.
It reveals that 173 domestic crypto trading and digital token platforms have “exited without risk” after the cleanup announcement issued in September 2017 by seven Chinese regulators.
Tax Law Of Japan
In Japan, the Cabinet has answered a question regarding the use of cryptocurrency for tax payments. While the Japanese inheritance tax law allows real estate and properties to be used to pay taxes, the answer explains that crypto-assets cannot be used for this purpose.