South Korea has designated mass-produced NFTs as virtual assets.
South Korea's financial watchdog, the Financial Services Commission (FSC), has issued guidelines clarifying the treatment of non-fungible tokens (NFTs) as virtual assets.
On June 10, local media News1 reported that the FSC will regulate NFTs in the same way as crypto, which has no distinguishing features from virtual assets.
According to the regulator, NFTs are considered virtual assets that are mass produced, distributed and used as payment.
Mass-produced NFTs can be used for payments.
NFTs with little to no value are treated differently. This applies to NFTs used in ticket or digital certificate NFTs. In these cases they are classified as general NFTs.
Jeon Yeo-seop, head of the FSC's financial innovation plan, said in an interview that it is likely that large volumes of NFTs will be used for payments.
The official highlighted that if one million NFTs were issued in one inventory, there would be many transactions. In this situation, the authority believes that NFTs can be used as a payment method.
Despite this, the FSC has announced that it will review stocks on a case-by-case basis. This means that there is no absolute standard when interpreting NFTs as crypto.
The new guidelines also suggest that NFTs can be considered securities if they exhibit characteristics specified in the country's capital market law.
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Virtual asset NFTs may receive interest.
In preparation for the implementation of new regulations for virtual assets in July 2024, South Korea's regulator has issued a series of guidelines to help stakeholders navigate the country's laws.
In the year By 2023, the FSC says, until July, virtual assets must receive interest when depositing their funds into crypto exchanges. However, the regulator clarified that the law does not cover standard NFTs and central bank digital currencies (CBDCs).
While regular NFTs and CBCCs are excluded, there are exceptions to the rule. The FSC's new amendment reiterates its statement last year that NFTs classified as virtual assets may earn interest once they are placed on exchanges.
This means that NFTs that are used as payment and issued in bulk are eligible for interest.
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