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South Korea Former Lawmaker to Face 6-Month Sentence Over Crypto Scandal

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  • Kim Nam-guk allegedly hid 10 billion won in cryptocurrency assets.
  • Prosecutors push for six-month sentence over false asset declarations.
  • South Korea’s crypto tax delay fuels intense political and legal debate.

Prosecutors in South Korea are pushing for a six-month prison sentence for former lawmaker Kim Nam-guk.  He allegedly concealed 10 billion won in digital assets during his property declarations in 2021 and 2022.

Prosecutors demand six-month prison sentence for Kim Nam-guk

Prosecutors have requested a six-month prison sentence for former South Korean lawmaker Kim Nam-guk. The prosecution team has accused Kim of obstructing the National Assembly Ethics Committee’s review of his property changes by concealing cryptocurrency assets.

Kim has been charged over his failure to declare substantial crypto holdings during the property declarations that he made in 2021 and 2022. The prosecutors stated that Kim concealed these assets to evade scrutiny thus he misrepresented his total financial worth.

Kim Nam-guk Faces Charges for Hiding 10 Billion Won in Crypto Assets

Kim Nam-guk has been accused of failure to report cryptocurrency assets worth around 9.9 billion won. In the said declaration made on September 16, 2021, Kim provided a total asset declaration of 1.2 billion won which is equal to $6.8 million, though he had a large amount of crypto holdings.

In 2022, Kim also failed to declare approximately 990 million won which is equal to $680,000 in crypto assets. The prosecutors accused Kim of transferring funds to a bank account to hide the source of his profits and falsify his asset declarations. Additionally, Kim converted the remaining crypto to assets which he declared as his total worth.

South Korea’s crypto tax delay fuels political instability and debate

South Korea has delayed the implementation of its long-awaited cryptocurrency tax law. The implementation of the tax law was previously set for 2025 but has now been postponed to 2027. The cryptocurrency tax law seeks to impose a 20% tax on cryptocurrency gains. 

The delay has caused political tensions in South Korea especially with the ongoing dispute between the ruling and opposition parties. The opposition Democratic party has accused the government of using the crypto tax delay as a political tool. The lack of clarity in cryptocurrency regulation has increased the political and economic instability in South Korea.

South Korea Extends Crypto Tax Deadline to 2027 Amid Investor Pushback

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  • South Korea delays cryptocurrency tax to 2027 to address investor concerns.
  • 20% tax to apply on crypto gains exceeding 2.5M won when enacted.
  • OECD framework to enhance tracking of overseas cryptocurrency transactions.

South Korea extends its crypto tax deadline to 2027 to address concerns about fair policies and global alignment. The 20% tax will target gains over 2.5M won, with international cooperation to improve oversight of overseas transactions.

South Korea Delays Crypto Tax to 2027 Amid Investor Concerns

South Korea has postponed its cryptocurrency capital gains tax to 2027 after an agreement between major political parties. The delay aims to address structural challenges in taxation and concerns raised by investors about market impact of the tax. The ruling People’s Power Party (PPP) had suggested a longer delay but the parties agreed on a two-year extension.

The government emphasized the need for a proper strategy to ensure transparent and fair taxation without disrupting the crypto space. Policy makers are cautious to disrupt the sector which has seen daily crypto trading volumes exceed traditional stock markets. The decision comes after several delays since the tax was initially proposed in 2021.

Tax to Impose 20% on Gains Over 2.5M Won When Enacted

The proposed tax will impose a 20% tax on annual cryptocurrency gains that exceed 2.5 million won. The tax law which was initially scheduled for 2021 has been postponed several times because of political disagreements and public concerns. After its enactment, it will be a remarkable regulatory achievement for South Korea’s virtual asset market.

However, stakeholders argue that the framework has no provisions for loss offsets and other practices that are available in traditional financial markets. Moreover, experts urge the government to change the tax policy to ensure fair treatment of cryptocurrency income. Additionally, there is a need for clearer guidelines on taxable events, acquisition costs and classification of  incomes.

OECD Reporting Framework to Aid Overseas Transaction Tracking by 2027

South Korea plans to align its cryptocurrency tax enforcement with the OECD’s Crypto Asset Reporting Framework by 2027. This system will facilitate the  automatic exchange of data between 48 participating jurisdictions to improve the global transaction transparency. This step seeks to address enforcement gaps in tracking overseas cryptocurrency transactions.

South Korea currently relies on domestic exchanges for tax data but is limited to track foreign transactions. Lack of adequate oversight could lead to tax evasion and capital outflows, says experts. The government expects to bridge the tax gaps and establish a solid enforcement structure through international cooperation.

Other countries such as the United States taxes crypto as property with profits taxed as capital gains based on the holding duration. The United Kingdom also taxes cryptocurrency profits as capital gains and allows loss offsets. Germany provides tax exemptions for crypto held over a year to encourage investment stability. Meanwhile, Japan taxes cryptocurrency income as miscellaneous income, with no provisions for loss offsets but detailed guidelines for acquisition methods.

Cryptocurrency Chaos: $34.2B Surge Amid South Korea Turmoil

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  • Unprecedented Crypto Surge: South Korean exchanges saw a record $34.2 billion in trading volume within 24 hours.
  • Political Chaos Impact: Emergency martial law caused panic selling, with Bitcoin prices plummeting to $62,182 on Upbit.
  • Aftermath: Political unrest led to treason charges and impeachment efforts against President Yoon and key ministers.

South Korea’s cryptocurrency market recorded an unprecedented 24-hour trading volume of $34.2 billion across major local exchanges, including Upbit, Bithumb, Coinone, Korbit, and Gopax. Upbit alone accounted for $27.25 billion, marking its dominance in the market. This staggering surge came during a turbulent political event, a six-hour emergency martial law declaration by President Yoon Suk-yeol late Tuesday night.

This trading frenzy nearly doubled the $18 billion volume recorded on December 2, which had already surpassed the daily turnover of the country’s stock market. According to Digital Asset, a South Korean cryptocurrency news outlet, this marked the highest single-day total for cryptocurrency trading this year.

Cryptocurrency Market Chaos During Political Crisis

The declaration of martial law, intended to counter alleged “anti-state” threats, triggered panic among South Korean crypto traders. Bitcoin prices on Upbit briefly plunged to 88 million won ($62,182), reflecting a sharp sell-off. Other major cryptocurrencies also faced significant declines. This panic-induced trading activity caused temporary outages across several platforms.

By early Wednesday, following a unanimous vote by lawmakers against the martial law order, President Yoon rescinded the decree. Crypto markets began to stabilize as the political situation eased.

The opposition party swiftly moved to press charges of treason against President Yoon and key government ministers, while also pushing for their impeachment. The broader political unrest has sent ripples across various sectors, with decentralized prediction markets like Polymarket reflecting the uncertainty. The odds of a half-million-dollar bet on Yoon’s early exit from office soared to 78% before settling at 47%.

Despite the immediate stabilization in the crypto market, South Korea’s political turmoil remains a focal point, with traders and investors closely watching its impact on the broader financial landscape.

Crypto Tax Delay: South Korea’s New Decision Puts Tax On Hold Till 2027

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  • South Korea pushes crypto tax to 2027, allowing traders more time to prepare for the 20% capital gains tax.
  • Political opposition delays the planned crypto tax, once set for 2025, amid concerns over its market impact.
  • The KDP and PPP strike a deal, postponing South Korea’s crypto tax for two more years, shifting implementation to 2027.

The South Korean government has once more delayed the introduction of its capital gains tax on digital assets, further complicating the country’s approach to cryptocurrencies. The new tax was supposed to be implemented starting from January 2025, but it will be postponed until 2027 due to the current political situation in the country.

During the press conference on December 1, Park Chan-dae, the floor leader of the Korea Democratic Party, affirmed that an agreement has been made to prolong the moratorium for two more years. This decision is made amid a political deal between the KDP and the ruling People’s Power Party (PPP), which has so far preferred a slower approach to taxing cryptocurrency gains.

Crypto Tax Timeline Shift

The delay is a major change in South Korea’s approach to cryptocurrency taxation. Previous proposals had suggested that the tax should be introduced from January 1, 2025, but political pushback and worries over the effect on the market have forced legislators to rethink. Initially, the PPP had hoped for a three-year transition, suggesting to shift the tax implementation to 2028. On the other hand, the KDP had earlier also been against such a delay as the organization wanted the tax to be in place from 2025.

Even still, the KDP has now signed off on the two-year delay, with Park stating that the extra time would allow for further assessment of the potential impact of digital assets gains taxation on the market and investors. The new development means that the South Korean regulators are likely to give traders up to 2027 years to prepare for the 20% tax which will be charged on the income from virtual currency trading.

Crypto Tax Impact on Investors

This is not the first time the South Korean government has delayed implementing a crypto tax either. At first, the government intended placing the tax into effect in 2021, yet the idea encountered opposition from the digital assets community. It was mainly fear of negative impacts such as limiting innovation and pushing away investments from the local cryptocurrency market. In response, the government first postponed the tax until 2023 before again moving the timeline to 2025.

If the tax is introduced, any South Korean crypto investor will be required to pay 20% of profit from digital assets. The KDP had at first proposed to raise the tax threshold where exemptions apply from 2 million KRW or $1,800 to 50 million KRW or $36,000. The proposal focused only on the big institutional investors in order to avoid over burdening the small traders with taxes.

South Korea confirms North Korea behind $50M Upbit hack

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South Korean authorities have officially attributed the $50 million Upbit cryptocurrency exchange hack to North Korean groups Lazarus and Andariel, further underscoring the rising sophistication of state-sponsored cybercrime. This group, infamous for targeting financial and cryptocurrency systems, has once again demonstrated its ability to infiltrate complex infrastructures and evade detection. The confirmation comes after extensive investigations by South Korean law enforcement in collaboration with international partners and blockchain analytics firms, who traced stolen funds to wallets linked to Lazarus and Andariel.

The 2019 Upbit Hack and its Aftermath

The 2019 hack saw the theft of 342,000 ETH, worth approximately $50 million at the time, from Upbit’s hot wallets. These funds were disbursed through an intricate web of blockchain transactions, a trademark obfuscation strategy employed by the Lazarus Group. Blockchain investigators noted that the stolen funds were sent through numerous mixers and exchanges, making it nearly impossible to track them fully. This method exploits the inherent pseudonymity of blockchain systems, presenting a significant challenge to investigators and regulators alike.

The attack underscores the urgent need for enhanced security measures in the cryptocurrency sector, which depends heavily on digital trust. Along with protecting assets, exchanges must prioritize improving their visibility and reputation in the online space. A specialized approach, such as SEO cryptocurrency growth strategies, plays a crucial role in boosting the credibility of reliable platforms, helping users identify trustworthy services, and discouraging fraudulent entities. As the industry continues to grow, these strategies are becoming essential for safeguarding its ecosystem from malicious actors.

Upbit, one of South Korea’s largest cryptocurrency exchanges, responded swiftly to the breach by reimbursing affected users and implementing stronger security measures. The incident prompted the platform to increase the use of cold wallets, which store private keys offline and are less vulnerable to hacks. Despite these efforts, South Korea continues to face relentless cyberattacks on its cryptocurrency infrastructure. Upbit reported over 159,000 hacking attempts in the first half of 2023 alone, reflecting the heightened risks facing the industry.

North Korea’s Strategy and Global Implications

The involvement of the Lazarus Group in cryptocurrency thefts is not new, and its activities have far-reaching implications. Operating under the aegis of North Korea’s intelligence agencies, the group reportedly funnels stolen cryptocurrency into programs supporting the regime’s nuclear ambitions. This strategy has allowed North Korea to bypass international sanctions and sustain its operations, drawing condemnation from global governments. The United Nations has also flagged these activities as a major concern, calling for coordinated global action to tackle such threats.

The Lazarus Group’s operations extend beyond South Korea. The group has been implicated in major international incidents, such as the 2014 Sony Pictures hack and the WannaCry ransomware attacks of 2017. Its involvement in the cryptocurrency sector is an extension of its broader strategy to exploit technological vulnerabilities for financial and strategic gains. The group is estimated to be responsible for over $1 billion in cryptocurrency thefts between 2017 and 2022, highlighting its dominance in this dark domain.

Challenges of Blockchain Anonymity

South Korea has made significant strides in combating cyber threats with robust cryptocurrency regulations, yet the success of groups like Lazarus highlights critical vulnerabilities. These gaps underscore the need for international collaboration, as no single nation can tackle such sophisticated threats alone. Industry experts emphasize the importance of global efforts, including real-time blockchain monitoring and stricter enforcement of anti-money laundering (AML) protocols, to enhance the resilience of cryptocurrency systems and prevent future attacks.

Shaping the Future of Cryptocurrency Security

This attack highlights more than financial loss; it emphasizes geopolitical tensions and the urgent need for global action against state-sponsored cybercrime. While efforts to recover funds continue, it has already reshaped discussions on cryptocurrency regulation and security. Strengthening blockchain defenses, enhancing tracing tools, and raising public awareness about secure practices are crucial steps to mitigate risks and protect the promise of digital assets.

South Korea’s Bold Crypto Guidelines for NFTs Revealed

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In a significant move to provide regulatory clarity in the fast-evolving crypto and digital asset space, South Korea’s Financial Services Commission (FSC) has announced new guidelines for regulating non-fungible tokens (NFTs). According to Yonhap news agency, the FSC will start treating certain mass-produced NFTs as cryptocurrencies under specific conditions.

The FSC’s new guidelines come as a response to the growing complexity and diversity within the NFT market. Traditionally, NFTs have been celebrated for their unique qualities, distinguishing them from cryptocurrencies. However, the FSC’s latest framework indicates that this distinction may blur if NFTs are mass-produced and exchangeable. In such cases, these NFTs could be subjected to the same regulatory scrutiny as traditional cryptocurrencies.

Crypto Compliance: FSC’s NFT Guidelines

Under the new regulations, the FSC will classify an NFT as a cryptocurrency if it loses its uniqueness and becomes fairly exchangeable or capable of being fractionalized. Additionally, if an NFT can be used for payments for goods and services, it would also fall under this category. This nuanced approach aims to ensure that NFTs used in a manner similar to cryptocurrencies are regulated appropriately.

Conversely, NFTs that remain unique and have limited economic value will retain their traditional classification. For example, digital tokens that serve as proof of transaction or concert tickets will continue to be treated as regular NFTs. This distinction ensures that the essence of what makes NFTs unique is preserved while providing a framework for those that function more like cryptocurrencies.

An FSC spokesperson emphasized that the classification of NFTs would be determined on a case-by-case basis, rather than applying a one-size-fits-all standard. This flexible approach allows the FSC to adapt to the rapidly changing digital asset landscape, ensuring that each NFT’s specific characteristics are considered.

Furthermore, the FSC’s guidelines suggest that NFTs could be classified as financial securities if they meet criteria outlined in South Korea’s Capital Markets Act. This addition further broadens the scope of how NFTs can be regulated, ensuring comprehensive oversight.

In summary, the FSC’s new guidelines represent a significant step towards regulating the burgeoning NFT market in South Korea. By potentially classifying certain NFTs as cryptocurrencies, the FSC aims to balance innovation with investor protection, providing much-needed clarity in a complex and dynamic industry.

South Korea’s Bitcoin ETF Debate Heats Up Amidst Election Fever

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As a nation with an active cryptocurre­ncy market, South Korea finds itself navigating policy de­cisions surrounding Bitcoin exchange-traded funds (ETFs) amidst upcoming parliame­ntary elections on April 9th, 2024. The two major political partie­s present diverge­nt stances, vying for voter support.

The ruling Pe­ople Power Party, led by Pre­sident Yoon Suk Yeol, has pledge­d to postpone the impleme­ntation of a digital asset tax. This move aims to provide room for the eme­rging industry and encourage further participation, re­sonating with crypto investors.

On the other hand, the­ opposition Democratic Party has adopted a progressive­ approach, promising to ease restrictions on ETFs, including those­ linked to US Bitcoin products. “We’re going to allow the­ ETFs, whether domestic or ove­rseas,” declared Hwanse­ok Choi, a policy specialist, aligning with the party’s manifesto. This stance­ resonates with over 6 million South Kore­ans actively participating in the crypto market through re­gistered exchange­s in 2023.

South Korea’s Bitcoin ETF Dilemma

South Korea’s regulatory stance on cryptocurre­ncies, particularly Bitcoin ETFs, has been cautious. This contrasts with the­ recent US approval of similar ETFs, which have amasse­d $57 billion in assets. The Korean Se­curities Commission’s opposition to these instrume­nts has created uncertainty, impacting dome­stic stocks.

South Korea’s gove­rning party proposes delaying the imple­mentation of crypto taxes, addressing inve­stor concerns about profitability. Analysts like Yumin Kim, an alternative­ asset expert at Hanwha Inve­stment & Securities Co., be­lieve that the e­ventual approval of Bitcoin ETFs would solidify the crypto market as a mainstre­am investment avenue­ in the country.

Balancing Innovation with Investor Protection

While­ South Korea actively participated in the­ recent crypto bull run, regulatory conce­rns persist. The dramatic collapse of Do Kwon’s Luna and Te­rraUSD tokens in 2022 serves as a stark re­minder of the risks inhere­nt to the market. Howeve­r, the current surge, with a total marke­t capitalization exceeding $900 billion this ye­ar, demonstrates the industry’s re­silience.

Both major political parties re­cognize the nee­d for robust investor protection measure­s and advocate for comprehensive­ regulations for the crypto industry. This suggests a pote­ntial shift towards a more accepting stance on digital asse­ts in South Korea, aligning with broader trends across Asia. Howe­ver, this path may diverge from the­ skepticism expresse­d by certain US officials.

The upcoming ele­ction will be a crucial turning point for South Korea’s cryptocurrency landscape­. The chosen party’s approach to Bitcoin ETFs and regulations will significantly impact inve­stor sentiment and the ove­rall trajectory of the industry in the nation.

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Crypto.com Dominates South Korea with Explosive Launch on April 29

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Crypto.com, a leading global digital asset exchange, is expanding its reach into the South Korean market with the launch of its retail trading services on April 29th. This move comes as the company aims to capitalize on the growing interest in digital assets within the region.

The announcement follows the exchange’s acquisition of OK-BIT, a locally licensed crypto exchange, back in 2022. With OK-BIT winding down its operations, Crypto.com is stepping in to fill the void, positioning itself as a key player in South Korea’s burgeoning digital asset landscape.

Source: Crypto.com

Eric Anziani, president and chief operating officer of the exchange, expressed enthusiasm about the launch, emphasizing the significance of the South Korean market for the company’s growth. He noted the high level of consumer interest in digital assets within the region, making it an ideal target for expansion.

However, operating in South Korea comes with its challenges, particularly regarding regulatory compliance. The local authorities have implemented strict regulations for digital asset exchanges to mitigate risks such as money laundering and market manipulation. As a result, the exchange’s Korean platform, known as the Crypto.com App, will adhere to these regulations, catering exclusively to retail investors and excluding institutional clients.

Crypto Integration in Korean Exchanges

One of the key requirements for exchanges in South Korea is to establish a partnership with a local bank to facilitate fiat-to-crypto trading. While the famous Korean exchange’s services will initially focus on digital asset trading, the company is committed to securing a bank partnership to offer a full trading experience to its users.

The decision to enter the South Korean market underscores the exchange’s commitment to global expansion and its recognition of the region’s potential as a major digital asset hub. By providing a user-friendly platform that complies with local regulations, the exchange aims to cater to the evolving needs of South Korean investors while contributing to the broader adoption of digital assets.

As the launch date approaches, all eyes will be on Crypto.com as it seeks to establish itself as a trusted and reliable player in South Korea’s dynamic digital asset world.

South Korea Plans Crypto Management System Combat Tax Evasion

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South Korea’s National Tax Service (NTS) is taking a firm stance against crypto tax evasion with the development of a “virtual asset integrated management system.” This system, currently in its preliminary consulting phase, aims at effectively analyzing and managing the information collected from mandatory virtual asset transaction reports.

The move comes amidst a resurgent crypto market, with Bitcoin reaching new highs of $71,231 on March 11, 2024. This renewed interest, coupled with the growing presence of virtual assets in institutional settings, has highlighted the need for robust taxation and anti-money laundering (AML) measures.

While the crypto business operators were required to report the details of any transactions to the Corporate and Income Tax Acts, there was a loophole in the absence of relevant analysis and management mechanisms. The new integrated system aims to plug this hole and ensure ‘fair taxation,’ preventing attempts that exploit the anonymity and decentralization of virtual currencies.

Global Push for Stricter Crypto Regulations

South Korea’s initiative aligns with the global trend of harder digital assets regulations. European Union (EU) actively makes market regulations, and the USA imposed new tax reporting requirements for virtual assets. Most of these regulations are recommended by the Financial Action Task Force (FATF), which is an intergovernmental organization focusing on anti-money laundering and terrorist financing activities.

PwC recently reported that global cryptocurrency rules are guided by what the FATF proposed, while the most extensive regulations for virtual asset businesses are being put into place in the world. These rules help maintain transparency and order in financial markets, prevent crime, and protect investors.

The possibility of the virtual asset management system is much more than simply raising tax revenue. By improving the transparency of crypto transactions, it fosters greater legitimacy that would draw more institutional investors to the cryptocurrency industry. It could even have an impact on whether South Koreans choose to stay in crypto for the long haul.

However, there are still some worries about the possibility of overreach that could stifle innovation. Finding the right regulatory middle-ground and encouraging the creation of a vibrant crypto culture in South Korea will be critical to its future success.

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South Korea To Discuss Bitcoin ETFs Approval And NFTs With SEC Chair

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The Head of South Korea’s Financial Supervisory Service (FSS) will meet Gary Gensler, who is the chair of the US Securities and Exchange Commission (SEC), in May this year, according to a report by Edaily. Non-fungible token (NFT) legal status and SPOT bitcoin exchange-traded funds (ETFs) approval will be among the topics to be discussed during the meeting.

NFTs repre­sent digital tokens of unique and scarce­ digital assets like art or music. Their re­cent popularity comes as cele­brities sold NFTs for millions. However, South Kore­a does not classify NFTs as regulated “virtual asse­ts” under crypto laws. The governme­nt believes NFTs have­ less financial market impact than cryptocurrencie­s.

However, as demand and speculation increase, Lee Bok-hyun has to meet with Gensler to see if NFTs should be treated as virtual assets under the law. If NFTs are considered virtual assets, then they may be governed by the FSS, which will impose some regulatory requirements on issuers and traders. These conditions may involve securing a license, teaming up with a bank, and obeying rules against money laundering.

Spot Bitcoin ETFs Approval in South Korea

Another topic of discussion between Lee Bok-hyun and Gensler will be the approval of spot bitcoin ETFs in South Korea. A spot bitcoin ETF is a fund that tracks the price of bitcoin and trades on a stock exchange. It allows investors to gain exposure to Bitcoin without having to buy, store, or manage the cryptocurrency themselves.

South Korea has banned local institutions from launching crypto-related products, such as ETFs, futures, or derivatives. It has also prohibited companies from brokering overseas-based spot bitcoin ETFs, which are available in countries like Canada and Brazil. The government has cited concerns over the volatility, security, and legality of cryptocurrencies, as well as the lack of investor protection.

However, both the ruling and the opposition parties in South Korea have announced that they will support the launch of local spot bitcoin ETFs in their election pledges ahead of the general election on April 10. They have argued that spot bitcoin ETFs will provide more options and transparency for investors, as well as boost the competitiveness and innovation of the local crypto industry.

Regulatory Framework

Meanwhile, South Korea is getting ready to launch the initial stage of its regulatory framework for cryptocurrencies, which will be put into effect in July. The intention of this framework is to guard against scams and hacking that crypto investors are prone to and manipulation of the markets through imposing some guidelines on crypto-services providers such as exchanges, wallets, and custodians.

The second half of the regulatory framework, which is still under development, will focus on standardizing the issuance and disclosure of crypto tokens, such as initial coin offerings (ICOs) and security token offerings (STOs). The framework will also address the taxation and accounting of crypto assets, as well as the supervision and enforcement of the regulations.

The meeting between Lee Bok-hyun and Gensler will be an opportunity for South Korea and the U.S. to exchange views and experiences on regulating the fast-growing and complex crypto market. It will also reflect the increasing global interest and attention on NFTs and bitcoin ETFs, as well as the challenges and opportunities they pose for the financial system.

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