South Korea Defines NFTs as Virtual Assets

News1 reported on June 10 that the FSC clarified NFTs would be treated like cryptocurrencies.

This is unless they exhibit distinct characteristics that differentiate them from virtual assets.

FSC Clarifies Treatment of NFTs

The guidelines specify that NFTs that are mass-produced, divisible, and can function as a medium of exchange will fall under the category of virtual assets. However, NFTs deemed to have little to no intrinsic value, such as those used for ticketing or digital certificates, will be classified differently as general NFTs.

Jeon Yo-seop, head of Financial Innovation Planning at the FSC, explained in an interview the rationale behind the classification. He highlighted the potential for high-volume NFT collections to facilitate transactions, envisioning scenarios where large quantities of NFTs could serve as a viable payment method. However, he noted NFT classification would be case-by-case, with no set standard.

Source: X

Moreover, FSC guidelines hint NFTs may be securities per Korean law. This regulatory approach aims to provide a comprehensive framework for evaluating the nature and function of NFTs within the broader financial ecosystem.

The FSC’s decision underscores South Korea’s proactive stance in adapting its regulatory framework to accommodate the evolving digital asset landscape. By delineating clear criteria for categorizing NFTs, the FSC seeks to enhance investor protection and foster innovation while ensuring compliance with existing financial laws.

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