South Korea labels mass-produced NFTs as virtual assets

The Financial Services Commission (FSC), South Korea’s financial watchdog, has released guidelines defining the conditions under which NFTs might considered virtual assets. The local media site News1 stated on June 10 that if NFTs lack characteristics that distinguish them from virtual assets, the FSC will regulate them like cryptocurrency. The regulator states that NFTs that are tradable, able to paid for, and manufactured in large quantities will be classified as virtual assets.

NFTs that have very little or no value will dealt with in different ways. This is true for NFTs which used for digital certificates or those used in ticketing. They categorized as general NFTs in these types of conditions.In an interview, Jeon Yo-seop, the head of Financial Innovation Planning at the FSC, stated that it is very likely that large-scale NFT collections will utilised as payment.

The official emphasised that if a collection of one million NFTs issued, there would be a large number of transactions. The official thinks that NFTs could potentially be a payment in this case.

Despite this, the FSC stated that it will evaluate each collection individually to make a distinction. This implies that there wouldn’t be a set rule for interpreting NFTs in terms of crypto. As well as according to the new rules it clearly said that NFTs can regarded as securities once they show the traits defined by the nation’s Capital Markets Act.

South Korean FSC clarifies Interest-Earning NFTs

The South Korean regulator released several guidelines to assist stakeholders in navigating the legal framework of the country before new regulations about virtual assets are put into effect in July 2024.The FSC stated in 2023 that by July, users depositing money into a cryptocurrency exchange must get interest on their virtual assets.

The regulator clarified that the regulation does not cover central bank digital currencies and standard NFTs. However, certain exceptions to the general rule include regular NFTs and CBDCs.The FSC released a new update confirming their previous year’s opinion, stating that NFTs categorized as virtual assets are eligible for interest after deposit. Therefore, users can earn interest on NFTs issued in large amounts and used as payment.