South Korea’s top financial regulator on Monday issued new guidance targeting non-fungible tokens to provide regulatory clarity for NFTs, according to Yonhap News Agency.
new guidelines According to reports The Financial Services Commission (FSC) has stated that it will regulate certain NFTs as regular cryptocurrencies if they are deemed to no longer possess the unique characteristics that distinguish them from cryptocurrencies.
The FSC said NFTs can be classified as cryptocurrencies from a regulatory perspective if they are mass-produced, fairly exchangeable, divisible, or can be used to pay for goods and services, Yonhap News reported, citing guidelines. I did.
On the other hand, digital tokens that are non-transferable and have little or no economic value are classified as regular NFTs. Such examples include NFT transaction proofs or concert NFT tickets.
An FSC spokesperson told Yonhap News that the collection, which has issued about 1 million NFTs, can be traded and used as a payment method like cryptocurrency. However, the FSC said it would review cases on a case-by-case basis and that there would be no absolute standard used to interpret NFTs as cryptocurrencies from a regulatory perspective.
The FSC’s new rulebook also proposed that NFTs could be classified as financial securities if they possess the relevant characteristics specified in the country’s capital markets law.
Korea’s new cryptocurrency law
The new guidelines are a precursor to the country’s first cryptocurrency-focused regulatory framework, which will come into effect on July 19. Named the Virtual Asset User Protection Act, the law aims to eradicate market illegal activities, such as using undisclosed information to invest in cryptocurrency. Manipulating market prices and engaging in fraudulent transactions.
The bill also requires cryptocurrency service providers to secure at least 80% of deposits in cold storage to protect user funds and enroll in an insurance program to potentially compensate users in the event of a security breach.
The new law is part of South Korea’s two-part bill that seeks to establish a regulatory framework for the cryptocurrency industry. The latter part of the regulations currently in development focuses on standardizing the issuance of cryptocurrency tokens and disclosing information for investors.
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