South Korea’s New Rulebook: South Korea Alters Crypto Classification, Including Select NFTs in Mainstream Category
Crypto News- In a move aimed at bringing clarity to the burgeoning world of non-fungible tokens (NFTs), South Korea’s top financial authority, as reported by Yonhap news agency, released new guidelines on Monday.
Navigating NFT Regulation: FSC’s Authority and Classification Approach
These guidelines outline how certain NFTs will be treated, with the Financial Services Commission (FSC) asserting its authority to regulate them akin to regular cryptocurrencies, should they lose their distinct characteristics.
According to the report, the FSC will categorize an NFT as a standard cryptocurrency if it becomes mass-produced, easily exchangeable, fractionable, or usable for goods and services payments.
Conversely, NFTs that lack transferability and hold little to no economic value, like proof of transactions or event tickets, will retain their traditional NFT classification.
An FSC spokesperson emphasized the need for a case-by-case evaluation, indicating that even a collection of a million NFTs could be treated as cryptocurrencies depending on their features.
Regulatory Momentum: South Korea’s Virtual Asset User Protection Act
These guidelines come ahead of South Korea’s upcoming comprehensive regulatory framework for the crypto sphere, slated to take effect on July 19th, named the Virtual Asset User Protection Act. The law aims to crack down on illicit activities such as market manipulation and fraud.
Under the new legislation, cryptocurrency service providers will be required to secure the majority of user deposits in cold storage and enroll in insurance schemes to shield users from potential breaches.
This law is part of a broader initiative in South Korea to establish a structured regulatory landscape for the crypto industry, with additional regulations in the pipeline focusing on token issuance standards and investor information disclosure.
Frequently Asked Questions (FAQ)
What are the new guidelines for NFTs in South Korea?
The guidelines allow the Financial Services Commission to regulate certain NFTs as regular cryptocurrencies if they lose their unique characteristics.
How are NFTs classified under these guidelines?
NFTs may be treated as standard cryptocurrencies if they become mass-produced, easily exchangeable, or usable for goods and services payments. Otherwise, they retain their traditional NFT classification.
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