- South Korea’s top financial regulator has issued new guidelines for NFTs.
- The guidelines will determine whether certain NFTs can be treated as regular crypto.
- The development comes ahead of implementing South Korea’s first crypto regime.
South Korea’s Financial Services Commission (FSC) has announced new guidelines to treat certain non-fungible tokens (NFTs) as regular cryptocurrencies, local media outlets reported on Monday.
The development comes ahead of the implementation of the Virtual Asset User Protection Act on July 19, the country’s first crypto-focused regulatory framework aimed at curbing illicit market acts, such as fraudulent transactions.
Regulating Certain NFTs Under Crypto Law
Yonhap news agency reported on June 10 that the FSC’s new rulebook may classify an NFT as crypto if it is issued in bulk, has a high possibility of fungibility, or can be exchanged for virtual assets.
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The FSC may also include an NFT in the scope of virtual assets regulation if it can be used as a direct or indirect means of payment for specific goods or services.
"For example, if 1 million NFTs were issued, there would be a lot of transactions and there is a possibility that they would be used for payment purposes," the report quoted an FSC official.
Per the report, digital tokens that cannot be traded or transferred and have minimal economic value or function may be interpreted as general NFTs rather than virtual assets. This may include digital tokens used as transaction proofs (receipts) or issued as tickets for exhibition.
The report said the FSC would make the distinction by reviewing cases individually, meaning NFTs will not be subjected to an absolute standard test to determine whether they are regular non-fungible tokens or crypto.
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Following a review according to the new guidelines, the FSC may require certain NFT issuers to comply with virtual asset-related laws and reporting obligations.
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