New Guidelines Issued by South Korea’s Financial Regulator on NFTs
In a surprising move, the Financial Services Commission (FSC), South Korea’s top financial regulator, has released new guidelines regarding non-fungible tokens (NFTs). The guidelines aim to provide clarity on the classification and application of these unique tokens.
Under the new guidelines, certain NFTs will be treated as regular cryptocurrencies under specific conditions. The FSC will classify NFTs as cryptocurrencies if they lose their unique characteristics and demonstrate traits like mass production, fair fungibility, fragmentation, or use as a means of payment for goods and services.
On the other hand, NFTs that are non-transferable and have minimal economic value, such as proof-of-transaction tokens or concert tickets, will continue to be categorized as regular NFTs.
According to an FSC spokesperson, approximately one million NFTs have been issued as collectibles, which can now be traded and used for payments similar to cryptocurrencies. However, it is emphasized that the classification of NFTs will be decided on a case-by-case basis with no universal standard for interpretation.
Furthermore, the guidelines outline that an NFT can be considered a financial security if it meets the criteria outlined in the South Korean Capital Markets Law.
These guidelines precede the enforcement of the Virtual Asset User Protection Act, South Korea’s initial regulatory framework focused on cryptocurrencies, which will be fully operational on July 19. The law aims to combat illicit market activities related to crypto investments, such as market manipulation and fraudulent transactions.
Please note that this article does not provide investment advice. To trade over 300 cryptocurrencies, you can sign up with Binance exchange with a 20% commission discount.
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