Japan and South Korea Take Big Steps in Crypto Regulation and Innovation

Japan's National Tax Agency has launched its new-generation core tax system, KSK2, to strengthen tax information analysis and return verification. The system consolidates previously scattered data and applications for different tax types and can identify potential omissions in crypto asset transaction filings using annual transaction reports from exchanges, bank fund records, and overseas tax information exchange data.

The Ministry of Finance has also established a research panel to study the feasibility of real-time on-chain government bond settlement. The panel will analyze the pros, cons, and implementation challenges of on-chain real-time settlement and may reference cases from the United States.

In South Korea, the virtual asset market capitalization has dropped 33% in half a year to 58.9 trillion won, and the number of market users has edged up 0.4% to roughly 11.17 million. The Financial Services Commission has proposed expanding tokenized securities to traditional securities, including stocks, bonds, and funds, and has set a net purchase cap for retail investors.