South Korea to Consider NFTs as Virtual Assets

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South Korea to Consider NFTs as Virtual Assets

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South Korea‘s Financial Services Commission (FSC) will consider NFTs as virtual assets from July 19. NFTs used for payments and exchanges will be recognized and eligible to accrue interest when deposited in exchanges. The news clarifies the situation of NFTs in the FSC’s guidelines published last year.

National governments and authorities across the globe are scurrying to accommodate the crypto world into their financial systems. Many are formulating new regulations, while some are revising existing ones. A recent example is South Korea‘s FSC, the country’s financial institution overseeing its economic activities, releasing new regulations.

Last year, FSC devised the guidelines to allow for the developments in the cryptocurrency market. These guidelines also include considerations of NFTs as securities. For this, there are strict rules NFT issuers must follow according to the Financial Investment Services and Capital Markets Act. NFTs not qualified as securities will fall under the ‘digital assets’ umbrella.

Digital assets were a feature of the guidelines, allowing users to deposit them in exchanges and receive interest. NFTs and Central Bank Digital Currencies (CBCDs) were notably excluded from the consideration as digital assets initially.

This year‘s update, released on June 10, integrates NFTs into South Korea’s regulated digital assets category. However, this will occur through a case-by-case review. The regulator will analyze NFTs for the following criteria – if the tokens are available abundantly, if they are divisible, and if they can act as a mode of payment or exchange. Features that discredit their acceptance as a digital asset by the FSC include – lacking transferability or payment utility and having very niche use cases.

The regulations come into force on July 19. The after-effect of their implementation can cause NFT prices to rise, thanks to their newfound regulated status. Future developments will let South Korean NFT enthusiasts know.