South Korea Declares Mass-Produced NFTs as Virtual Assets

Last Updated on June 10, 2024

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Key Takeaways:

  • Mass-produced, divisible NFTs used for payments will be regulated like cryptocurrencies in South Korea.
  • NFTs with minimal value, such as those for ticketing or digital certificates, will be classified as general NFTs and treated differently.
  • NFTs may be classified as securities under the Capital Markets Act and can earn interest when deposited on crypto exchanges, except for regular NFTs and CBDCs.

South Korea’s Financial Services Commission (FSC) has issued new guidelines defining when nonfungible tokens (NFTs) can be considered virtual assets.

Mass-produced, divisible NFTs that can be used for payments will be regulated similarly to cryptocurrencies.

In contrast, NFTs with little to no value, such as those used for ticketing or digital certificates, will be classified as general NFTs and treated differently.

The FSC’s Jeon Yo-seop highlighted that large NFT collections could likely be used as payment methods due to their transaction volume.

However, the classification of NFTs will be determined case-by-case, without an absolute standard.

Additionally, NFTs might be treated as securities if they meet criteria under the Capital Markets Act.

Ahead of new virtual asset regulations coming in July 2024, the FSC’s guidelines clarify that virtual assets, including certain NFTs, can earn interest when deposited on crypto exchanges.

Regular NFTs and central bank digital currencies (CBDCs) are excluded from this provision.

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