FinTax Crypto Compliance Policy Report for the Second Half of November

Abstract

This report summarizes the developments in tax, accounting, and regulatory policies in the global cryptocurrency sector during the second half of November 2024. 

In the tax field, South Korea's Democratic Party is pushing for a 20% capital gain tax on cryptocurrency gains starting from 2025, raising the taxable income threshold to 50 million won. Japan has passed a stimulus plan committing to cryptocurrency tax reforms, proposing a flat tax rate of 20% on cryptocurrency assets, replacing the current miscellaneous income tax rate.Hong Kong plans to offer cryptocurrency tax breaks for hedge funds and family offices of ultra-wealthy individuals. Russia has further clarified its tax regulations for mining and trading, exempting value-added tax (VAT) on cryptocurrency asset transactions. 

In the accounting field, South Africa's Financial Intelligence Centre has issued Directive 9, requiring crypto asset service providers to transmit both parties' transaction details, retain records, and comply with cross-border transaction laws. The directive takes effect in April 2025, with heavy penalties for non-compliance. Accounting firms must advise clients to adhere to the directive and align with international standards. 

In the compliance field, the UK plans to introduce comprehensive cryptocurrency regulation by 2025 and positions itself as a global digital asset hub. Morocco has shifted its policy stance on cryptocurrencies from a ban to active regulation.

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Part I Tax 

Asia-Pacific 

South Korea 

Tax - South Korea - Democratic Party Pushes for 20% Crypto Capital Gain Tax in 2025 with Higher Tax Threshold (11.20) 

South Korea's ruling Democratic Party (KDP) plans to implement a 20% Capital gain tax on cryptocurrency gains starting in 2025, raising the tax-exempt threshold from 2.5 million won (approximately $1,795) to 50 million won (approximately $35,919). Originally set to take effect on January 1, 2022, the policy has been postponed to 2025 due to strong opposition from investors and the industry. The new policy also allows taxpayers to use a percentage of the selling price as the tax base when accurate purchase records are not available. The revised bill is expected to be voted on by the National Assembly's tax subcommittee on November 25 and submitted to the full assembly for review on November 26 . Click to read the original article.  

Japan 

Tax - Japan-Japan Passes Stimulus Package and Commits to Crypto Tax Reform (11.20) 

Japan has approved a stimulus package and is committed to cryptocurrency tax reform, with proposed changes including taxing cryptocurrency at a 20% flat rate instead of the current variable 'miscellaneous income' rate. Following Prime Minister Shigeru Ishiba's promise to engage in bipartisan discussions, the economic stimulus package is expected to be approved before the end of 2024. According to a Bloomberg report, the proposed tax reform measures include changes to income tax, corporate taxes, and cryptocurrency taxes, marking a shift from the governing party's previous policy advocating for higher taxes. The opposition party has called for a 20% flat taxation rate for digital assets alongside other tax cuts. Click to read the original article.

Hong Kong 

Tax - Hong Kong-Hong Kong plans to offer cryptocurrency tax breaks for hedge funds and ultra-rich family offices (11.28) 

Hong Kong plans to exempt private equity funds, hedge funds, and ultra-high-net-worth individuals' investment vehicles from paying taxes on cryptocurrency, private credit investments, and other asset gains. This week, the Hong Kong government stated in a 20-page proposal that tax is one of the "main considerations" for asset management companies when deciding where to base their operations, and the government aims to create a "favorable environment" for them. The proposal suggests expanding the tax-exempt investment scope to include private credit, overseas real estate, and carbon emission quotas. The government is conducting a six-week consultation on the plan.Click to read the original article. 

Europe and America 

Russia 

Tax -Russia- Russia Introduces Clearer Tax Rules for Crypto Mining and Trading (11.19) 

The Russian government has set a maximum tax rate of 15% on crypto trading and mining income, exempting crypto transactions from value-added tax (VAT). Stricter regulations have been introduced for crypto miners, including mandatory reporting and registration. The new amendments establish a 15% tax cap on income generated from crypto activities, aligning with the taxation of securities trading. The Finance Ministry has emphasized that this approach ensures a fair balance between the state's interests and the businesses operating in the crypto space. Crypto assets are now classified as property for taxation purposes, solidifying the legal framework around digital currencies. Additionally, crypto mining farms and pools offering services to individual miners must report these miners to tax authorities to ensure transparency. The new tax laws follow stricter regulations introduced by the Russian government for crypto mining, addressing electricity theft and shortages associated with crypto mining activities. Click to read the original article. 

Part II Accounting 

Africa 

South Africa 

Accounting - South Africa - New Travel Rule Directive to Boost Crypto Transaction Transparency (11.19) 

The Financial Intelligence Centre (FIC) in South Africa issued Directive 9, mandating compliance with the ‘travel rule’ for crypto asset transactions, effective from April 30, 2025. This directive establishes strict transparency standards for accountable institutions engaged in crypto asset transfers to prevent money laundering and terrorist financing. All Crypto Asset Service Providers (CASPs) registered with the FIC must comply, securely transmitting originator and beneficiary details with each transaction, maintaining detailed records, and adhering to legal requirements for cross-border transactions. Non-compliance may lead to significant financial penalties. Accountants are advised to educate clients on their obligations under Directive 9 and ensure alignment with international standards. Click to read the original article. 

Part III Compliance 

Europe and America 

The United States 

Compliance-US-U.S. SEC Loses Crypto Lawsuit Over 'Dealer' Definition That Pushed Into Crypto (11.21) 

A Texas federal court ruled that the regulator's new dealer definition that included crypto entities was "untethered" to U.S. securities law. The U.S. District Court for the Northern District of Texas has ordered the Securities and Exchange Commission to throw out its so-called "dealer" rule, finalized in February. Crypto industry groups had sued the agency, arguing its rule marked an inappropriate stretch into the sector. Click to read the original article. 

Compliance-US-CFTC Endorses Tokenizing Trading Collateral (11.22) 

The Commodity Futures Trading Commission (CFTC) has endorsed blockchain for managing trading collateral in U.S. derivatives markets, as noted in a report on November 21. The report suggests blockchain, including tokenization, can resolve issues in traditional exchanges and expand collateral asset options. CFTC Commissioner Caroline D. Pham highlighted the global success of asset tokenization and its potential to clarify U.S. digital asset regulations. Blockchain networks can enable real-time collateral transfers without intermediaries, facilitating peer-to-peer transactions and allowing asset owners to transfer or pledge assets without brokers.Click to read the original article 

Africa 

Morocco 

Compliance - Morocco - Morocco Drafts Regulations for Crypto, Central Bank Governor Says (11.26) 

Morocco, which banned crypto in 2017, is now formulating rules for the sector. Central Bank Governor Abdellatif Jouahri announced that Bank Al-Maghrib, with the support of the World Bank, has prepared a draft law regulating cryptoassets. Morocco will also continue to explore the potential contribution of central bank digital currencies to its policy objectives, including financial inclusion. Click to read the original article. 

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