Sweeping reforms are in the cards for Australia's crypto sector.
So what can investors expect?
Welcome to The Daily Forkast.
March 21st, 2022.
I'm Angie Lau, Editor in Chief of Forkast, covering all things blockchain.
Well, Australia's plans for crypto regulation reform cover everything from taxes to investor
protection and Australia isn't the only country in the region where plans for overseeing the
sector are developing with South Korea and India on the case, too.
We're going to take a look at those stories and more coming up.
Let's get you up to speed from Asia to the world.
Join thousands of NFT traders who already start their day on CryptoSlam.
Well, today's key word is regulation.
So let's take a dive into what's happening with that around Asia.
First up in South Korea, preparations for the imposition of the Financial Action Task
Force's travel rule are heating up.
It all comes into effect in the country this Friday.
And South Korean crypto exchanges are getting their house in order.
Do not move.
The owner of the Upbit exchange has signed a memorandum of understanding to link its
Verifyvasp solution to the code solution developed by Bithumb, CoinOne and Korbit.
That link will allow users of the big four exchanges in Korea to make inter-exchange
transfers once the rule comes into operation.
The travel rule is a set of global guidelines requiring digital asset companies to collect
and disclose customer information for transactions of over US$1,000.
It is intended to counter money laundering and terrorist financing.
Now South Korea says the rules will apply to all transactions of over KRW1 million or
just over US$800 starting March 25th.
Meanwhile, in India, cryptocurrency investors in that country may soon face a hefty tax
for every transaction.
Local media reports that the Indian government is working to determine whether cryptocurrencies
can be classified as goods and services.
If so, then a different taxation scheme can be imposed on the digital assets.
Now government officials believe crypto trading is similar to gambling and lotteries, which
incur a 28% goods and services tax or GST.
Now currently cryptocurrency is categorized as financial services and as such an 18% GST
is levied on transactions on exchanges.
Now last month, India's finance minister Nirmala Sitharaman announced plans for a 30% tax on
crypto income, as well as a 1% tax deducted at source on every transaction.
However, the industry is still left craving clarity over crypto legislation, as the government
has insisted that taxation does not mean legalization.
Whatever happened to no taxation without representation?
Well, I guess when it comes to crypto, India is still trying to figure it out.
You can find those stories and more at Forkast.News.
But it's potentially right side up in the land.
Down Under.
Over in Australia, reform is on the way for the crypto sector, with additional protection
for investors and regulation for crypto exchanges and brokers expected to be key.
Forkast Monika Ghosh followed all the action.
The Australian Government is beginning further consultation with the crypto sector, seeking
advice and input on its plans for regulatory reform for the industry.
One aspect it will investigate is the development of a licensing or custody regime for digital
assets.
With the Treasury considering compelling exchanges to hold investments made by Australians onshore.
While the country's Council of Financial Regulators has also been tasked with reviewing the practice
of major banks, debanking crypto businesses.
Numerous examples of crypto businesses repeatedly being denied service were included in last
year's Senate report on Australia as a technology and financial center.
And many of the reforms being proposed now are based on the 12 recommendations handed
down in the Senate report.
The committee behind that report was headed by Senator Andrew Bragg, who also spoke at
Blockchain Week Australia earlier today, where he called for urgent regulation of decentralized
autonomous organizations or DAOs as part of his Digital Services Act proposal.
Bragg explained that DAOs can replace companies and are therefore an existential threat to
the country's tax base since they are not liable to pay company tax.
The Senator added that the intention of the reforms is to protect the public against malicious
actors and signal that Australia is open for business.
At the same event, the Minister for Digital Economy, Jane Hume, said the Government is
looking to introduce a licensing regime providing a patch of approval for crypto exchanges.
The reforms are expected to be implemented by the end of this year.
For Forkast, I'm Monika Ghosh.
In an interesting development for the world of tokenization and how it relates to legacy
asset classes, the Spanish banking giant Santander has partnered with Argentina's AgroToken to
offer loans backed by tokenized commodities like corn and soy.
So could this be another sign of maturity for tokenization?
And who better to ask than someone with a passion for tokenization?
And that's Henry Chong, CEO of Fusang.
Fusang aims to reshape investment markets with blockchain technology.
And of course, tokenization is right up there, Henry.
Absolutely.
You know, always great to be here.
And so this is a really cool idea of unlocking value in farms.
And if you think way back to even the birth of financial markets, what was Wall Street
except to find a marketplace for farmers to interact with each other for future buyers
and the yield, the harvest that they have.
Now, we fast forward to the 21st century.
What do you think of this idea?
How could it change the commodities market as we know it today?
It's great that you bring up commodities markets because as you said, the initial idea behind
things like commodity futures is so that farmers can go out and hedge their risk.
It's meant to be around making physical supply chains more efficient, not just about financial
speculation.
And unfortunately, that's obviously a large part of what Wall Street does today.
And as I mentioned, it's very exciting to see some banks starting to move back to the
roots, almost of saying capital markets in their original conception is there to allocate
capital to interesting ideas and projects - that's capitalism.
And unfortunately, I think there are too many people, banks included, who are still focused
just on rent seeking behavior and making money by being an intermediary and playing that
role as a gatekeeper.
I want to talk about these Agrotokens a little bit more and these Santander loans could,
of course, allow farmers to unlock their business potential.
But let's take a look at how startup companies could also use tokenization to unlock their
potential.
Are the barriers for entry coming down across the board here?
I don't think that tokens can or indeed even should be seen as an exit opportunity or quite
frankly, as a get rich quick scheme.
Tokenization is just another technology layer to, as I said, make capital markets more efficient,
which in its original and conception is about saying, I'm a company, I've got an interesting
idea or a project.
I need capital to help fund my company so I can actually build a real business.
And this is as true for startups as it is for farmers.
Same question as you said, with Agrotokens, farmers say, I need capital, I want to focus
on running my business.
Is there a more efficient way that I can go out and raise capital?
And especially if I can start to do this from people who are stakeholders of my own company?
Right.
Every farm has its own supply chain.
If I can just figure out how I can turn some of these stakeholders into shareholders, I
think then we will finally get a little closer to that original promise of capitalism.
Yeah, absolutely.
Speaking of legacy assets moving into the tokenized world, and I know that you're pioneering
so many of of that movement.
How about art here?
There's undoubtedly a lot of buzz about the NFT space.
There's also been a lot of criticism over plagiarism, theft and what buyers are really
getting for their money.
What is that telling us about the need for an underlying asset to a token where unlocking
value is concerned?
Just like how something like a security token is just a technology layer, and we always
need to dig one step deeper and say, what exactly does this token represent as an asset?
NFTs are no different.
We've got fungible tokens.
We'll have non-fungible tokens.
And the question is, do these tokens give you either, number one, legal or contractual
rights to some kind of underlying asset?
Now, that asset, it could be physical lot.
It could, quite frankly, be digital art.
But again, making sure that the token actually gives you some kind of right, a copyright
or ownership even of a piece of digital art, or it could have utility value.
And I think both of those two things, either real ownership or utility, are very exciting
in the NFT space.
And to me, that's really where NFTs need to progress to what I call NFT 2.0, where they
start to be linked to real assets.
And right now the honest truth is that most NFTs don't work that way.
It's a massive, massive problem.
Again, no different than what we're trying to say in the security token space, which
is the technology is very exciting.
But make sure that your tokens represent something real.
Something real, something tangible.
It is tokenizing the world, after all.
Henry Chong, always a pleasure.
Thank you.
And that's The Daily Forkast from our vantage point right here in Asia.
For more, visit Forkast News,.
I'm Editor in Chief Angie Lau, until the next time.