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South Korea May Delay Crypto Income Tax Rule to January 2022

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South Korean lawmakers want to delay the implementation of the new rules in order to give more time to crypto exchanges to get ready.

South Korea may extend the implementation of its earlier proposed crypto income tax rule to January 2022, an extension of about 3 months from the earlier proposed October implementation plan. The plan to extend the implementation of the rule was revealed in a report published by a local South Korean media Dong-a Ilbo.

Per the reports, the lawmakers from the South Korean National Assembly’s planning and finance committee issued a report suggesting that it is necessary to consider enforcing the crypto income tax rule from at least January 1, 2022, in a bid to give enough allowance to cryptocurrency exchanges to put plans in place to implement the rules.

Dong-a-ilbo noted that the lawmakers look to hand out this allowance because cryptocurrency exchanges complained that they did not have enough time to adjust their books and develop the right crypto reporting tools to be able to comply with the tax rules.

Crypto Income Tax in South Korea

Earlier, Coinspeaker reported the South Korean proposal to levy a 20% income tax on crypto gains of 2.5 million Korean won, or about $2,000 due to the increasing rise of earnings on exchanges. Yonhap news agency said at the time:

“According to the data released by Rep. Park Kwang-on of the ruling Democratic Party, accumulated commission-related sales of some 30 cryptocurrency exchange operators are presumed to have reached 700 billion won [~USD$658 million] as of the end of last year, compared with an estimated amount of 8 billion won as of the end of 2016.”

To comply with this, South Korea put up the “Specific Financial Information Act” which details the timeline expected for exchanges to complete a reporting system slated for March next year, the completion of a Know Your Customer (KYC) procedure by September 2021 so that deposits and withdrawals can be adequately captured before the implementation which is slated to commence by Oct. Should the new extension be agreed on following the Subcommittee’s meeting to decide on a specific taxation time next week, crypto exchanges will have a 3-month window to get ready for the new crypto tax regime.

South Korea and Cryptocurrency Exchanges

South Korea is renowned for having zero tolerance for misdemeanor especially as it relates to cryptocurrency exchanges. South Korean authorities conducted about two consecutive raids on Bithumb cryptocurrency for alleged money laundering levied on the chairman of the board at Bithumb Korea and Bithumb Holdings Lee Jung-hoon.

The clampdown on Bithumb spurred the exchange to give itself up for sale with China-based cryptocurrency exchange Huobi Global among the top outfits to take over the exchange. Apparently, the zero-tolerance of South Korea on situations of money laundering and tax fraud is unacceptable, a position that may allow the country to give the concerned parties the needed allowance to adjust to the changes that are set to come.

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Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.



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The Bitcoin Whales Won’t Stop Buying

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According to a number of different data points, bitcoin whales saw last week’s volatility and price declines as a chance to accumulate.

This episode is sponsored by Nexo.io.

Today’s grab-bag episode looks at five different topics:

  • Bitcoin whales kept accumulating during last week’s dip
  • Jim Cramer advises Powerball winner to put 5% in bitcoin
  • Previewing the first FOMC meeting of the Biden Administration
  • Earnings week on Wall Street looks good for Big Tech
  • An insider’s look at the state of crypto venture capital

Image credit: munandme/Getty Images Plus



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We Have Entered the Age of Anonymous Crypto

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Recently, following a change to Whatsapp’s privacy policy, hundreds of thousands of people from all over the world left for other services. Signal, an encrypted messenger service, saw so many sign-ups that it temporarily crashed.

This was followed by a mass exodus from social media, as Twitter and Facebook became embroiled in a debate on free speech and censorship, a chain of events that may signal a shift in how users value privacy.

Rachel-Rose O’Leary is a coder and writer at Dark Renaissance Technologies. She was a tech writer for CoinDesk from 2017 to 2018, covering privacy tech and Ethereum. She has a background in digital art and philosophy, and has been writing about crypto since 2015. The views expressed in this article are her own and do not necessarily reflect those of the publication.

Riccardo Spangi or “fluffypony,” the former lead maintainer of privacy-centric cryptocurrency monero, called this a “watershed moment” for privacy. “People are realizing that you don’t get privacy just handed to you. You have to stand up and take it,” he told CoinDesk.

For years, topics including anonymity, censorship resistance and decentralization were the purview of political extremists. Armed with a pessimistic, even paranoid outlook, the forefathers of cryptocurrency engineered tools, like Bitcoin, for a world where civilization had fallen.

But now, spurred on by an information crisis and compounding global unrest, privacy has entered popular consciousness.

As on the popular consumer-facing apps such as Signal, activity on the encrypted anonymous internet, the darknet, is on the rise. While it’s hard to estimate usage due to its anonymity benefits, Tor Browser was downloaded 10% more on average this January than last year. In the past 12 months, the number of hidden websites has increased 180%.

This rising popularity could be driving an increase in monero transactions. In December, darknet market Whitehouse reportedly announced it would no longer accept bitcoin payments, strengthening monero’s foothold as the cryptocurrency of choice for the darknet. 

See also: Steven Waterhouse – The Pandemic Turbocharged Online Privacy Concerns

In fact, despite being delisted from exchanges Shapeshift and Bittrex, monero’s price has steadily grown 140% in the past year, while its daily transactions have increased by a staggering 290%. Zcash has likewise increased nearly 70% in price. 

All of this is to say there’s a growing demand for privacy. What’s more, the privacy scene has never been more prepared for an influx of users. 

A new dawn

Privacy has always been a core value of the crypto-anarchist philosophy. Bitcoin itself was designed to be pseudonymous, but its privacy-protecting features are insufficient to protect users from blockchain analysis. 

In the past 10 years, fully anonymous cryptocurrency has emerged as a Holy Grail of blockchain research. Millions in research dollars have been committed, though until recently no purely private cryptos emerged without substantial trade-offs to scalability and decentralization.

Several small, incremental achievements are beginning to come to fruition. Litecoin is testing a potential privacy upgrade, Mimblewimble. Privacy coin Firo, previously named Zcoin, is pioneering new cryptographic research with its recent release of Lelantus.

Meanwhile, earlier this month, Zcash announced its plan to implement Halo 2, a groundbreaking upgrade that will allow the cryptocurrency to add new assets to its base layer, such as an anonymous stablecoin or wrapped versions of other cryptocurrencies – while Monero is also building toward a multi-chain paradigm, specifically with privacy implications for Bitcoin through atomic swaps.

Further, while Monero’s ring signatures reduce its anonymity, a new upgrade called TRIPTYCH will make this privacy leakage less of a concern.

Bitcoin, too, will see privacy-protecting enhancements with the long-anticipated rollout of its Taproot upgrade. When activated, Taproot will allow smart contracts written in the Bitcoin scripting language to appear like normal transactions, so more complex code can populate the blockchain undetected.

It’s not just traditional cryptocurrencies that are undergoing a renaissance. Privacy apps are proliferating on decentralized finance (DeFi) while private smart contract platforms like Secret Network and Aleo are enabling general purpose, programmable privacy. 

Can the state withstand a full-blown Bitcoin offensive?

Amir Taaki has been working on anonymity tech in crypto for nearly 10 years.

“Zero-knowledge is probably the biggest breakthrough in cryptocurrency since the invention of Bitcoin itself. It enables an entire new class of privacy applications that previously couldn’t exist before,” he said.

The darkening

Advances in privacy tech have the potential to revolutionize not just cryptocurrency, but all aspects of how we interact with the web. The internet is currently dominated by data harvesting and surveillance. In exchange for using a service, user data is collected by companies for increasingly surreal purposes, such as behavior prediction and control. 

By offering a new economic vision for technology, the cryptocurrency ecosystem has the potential to challenge this paradigm. Mixnet provider Nym Technologies is working in this direction, offering privacy-friendly applications the ability to monetize their services.

Still, these new vistas will not be without their challenges. For the last year, crypto has been awash with rumors and headlines foretelling an impending regulatory crackdown. 

In an interview that coincided with her statement that the European Central Bank (ECB) will release its own digital currency – the digital euro – within the next five years, ECB President Christine Lagarde called for global bitcoin regulation. Separately,  U.S. Treasury Secretary nominee Janet Yellen said that cryptocurrencies are a “particular concern” for terrorism financing, and stated the need to “curtail their use.”

Both the U.S. and European Union – formerly a privacy stronghold – have also floated rules that threaten end-to-end encryption and privately held crypto addresses.

See also: Proposed Crypto Wallet Rule Among Those Frozen by Biden Pending Review

If there was ever a need for strong, unhackable, privacy-preserving tools to be built, it’s now. 

Worst-case scenario

Regulatory pressure may have an unintended consequence by making privacy-preserving cryptocurrencies more attractive. In a scenario where crypto is banned, crypto will merely go underground, where it had its beginnings.

A nightmare scenario for an industry overrun by bankers, such a grim regulatory outlook is widely dismissed as FUD. Not only would this cripple the emerging cryptocurrency ecosystem financially, but it would severely damage its core value propositions: openness, accessibility, being permissionless.

Still, perhaps in anticipation of regulatory crackdowns, Bitcoiners are adopting an increasingly militant rhetoric. Rumors of an impending “privacy war” have been circulating on Twitter, with cryptocurrency advocates volunteering themselves for the front line. 

According to Taaki, such a confrontation is effectively preprogrammed.

“I don’t see a resolution between an emerging cryptocurrency industry and the state-backed fiat system,” he said, “These things are [at] loggerheads, and using anonymity to shield participants in a network is of vital importance to our success as a movement.” 

See also: Michael Casey – A World Where Privacy and Saving Lives Can Coexist

The developer of privacy-focused Bitcoin wallet Wasabi, Max Hillebrand, said he is confident Bitcoin’s users will step up to the challenge. Armed with advanced technology and an ideology capable of carrying its followers to the barricades, he wondered:

“Can the state withstand a full-blown Bitcoin offensive?”





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Harvard, Yale, Brown Endowments Have Been Buying Bitcoin for at Least a Year: Sources

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Some of the largest university endowment funds in the U.S. have been quietly buying cryptocurrency for the past year or so through accounts held at Coinbase and other exchanges, CoinDesk has learned.

According to two sources familiar with the situation, Harvard, Yale, Brown and the University of Michigan as well as several other colleges have been buying crypto directly on exchanges. (Several Ivy League endowments took an interest in blockchain technology via crypto-focused venture capital funds back in 2018.)

“There are quite a few,” said a source who asked to remain unnamed. “A lot of endowments are allocating a little bit to crypto at the moment.”

Yale and Brown did not respond to requests for comment by press time. When reached by CoinDesk, the Harvard and University of Michigan endowments declined to comment. Coinbase also declined to comment. University endowments got a single mention in Coinbase’s annual report for 2020, but without naming any names.

Some of the university endowment funds in question may have held accounts with Coinbase for as long as 18 months, according to one source. 

“It could be since mid-2019,” the source said. “Most have been in at least a year. I would think they will probably discuss it publicly at some point this year. I suspect they would be sitting on some pretty nice chunks of return.”

University endowments are pools of capital accumulated by academic institutions, often in the form of charitable donations. These funds, which support teaching and research, can be allocated into various assets for investment purposes.

Harvard’s is the largest university endowment with over $40 billion in assets. Yale has over $30 billion, Michigan has about $12.5 billion, while Brown holds $4.7 billion. It is unknown how much each fund has allocated in crypto but it is likely a fraction of percent of their total assets.

Back in 2018, Yale University Chief Investment Officer David Swensen made headlines by backing two crypto-focused venture funds, one run by Andreessen Horowitz and another launched by Coinbase co-founder Fred Ehrsam and former Sequoia Capital partner Matt Huang.

Several other universities followed Yale in backing crypto VCs, including Harvard, Stanford, Dartmouth College, MIT, University of North Carolina and Michigan. Clearly, some of those schools appear to be taking the next step by investing directly in crypto assets.

The second source, who is involved in the crypto hedge fund world, pointed to “a big change” over the past few months. “We are seeing defined benefit pension plans getting close to making allocations. We are seeing public pension plans getting close to making allocations,” the person said.

“If I had heard that three years ago, I would have said it was wrong,” said Ari Paul, co-founder of BlockTower Capital and previously an investment manager for the University of Chicago. “But a lot of institutions are now comfortable with bitcoin. They understand it and can just buy it directly, as long as it’s from a regulated entity like Coinbase, Fidelity or Anchorage.”



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