The Financial Services Commission (FSC), South Korea's top financial regulator, has published new guidelines on non-fungible tokens (NFTs), clarifying the application for these tokens.
South Korea Will Treat Some NFTs as Regular Crypto Under New Guidelines
According to Yonhap news agency, the FSC will now regulate certain NFTs as regular cryptocurrencies under certain conditions.
The guidance states that NFTs will be classified as cryptocurrencies if they lose their unique distinguishing characteristics and exhibit characteristics such as mass production, fair fungibility, fragmentation, or use for payments for goods and services.
In contrast, NFTs that are non-transferable and have minimal economic value, such as proof-of-transaction tokens or concert tickets, will continue to be classified as regular NFTs.
An FSC spokesperson stated that the collectibles, of which approximately one million NFTs have been issued, can be traded and used as payment measures similar to cryptocurrencies.
However, the FSC emphasized that the classification of NFTs will be determined on a case-by-case basis and there is no single standard for interpretation.
In addition, the new rulebook suggests that an NFT can be classified as a financial security if it meets the criteria set out in the South Korean Capital Markets Law.
The guidelines come ahead of the implementation of the Virtual Asset User Protection Act, South Korea's first crypto-focused regulatory framework, which will come into full force on July 19.
This law aims to eliminate illegal market activities, including the use of undisclosed information, market price manipulation and fraudulent transactions for crypto investments.
*This is not investment advice.
