South Korea to treat some NFTs as regular cryptocurrencies under Virtual Asset User Protection Law: report

South Korea is stepping up efforts to formulate rules to oversee the virtual digital asset sector, with the Financial Services Commission (FSC) spearheading the drafting of these laws. Seoul’s new guidelines will lead regulators to classify bulk or large-scale non-fungible tokens (NFTs) as regular cryptocurrencies, under the Virtual Assets User Protection Act. South Korea could become one of the first countries to clearly define NFT the status of NFTs and their role in the Web3 sector.

NFTs are virtual assets that have underlying value. Supported on blockchain networks, NFTs could be inspired by artwork, game characters, GIFs, as well as video and music content. Purchasing an NFT gives its holder full ownership rights. Most NFTs are unique, which allows them to retain their value. In Web3 ecosystems such as metaverse-related games, NFTs can be traded and provide holders with an immediate liquidity option.

South Korean regulators studied NFTs, before guidelines related to their governance were published. “NFTs that are issued in large quantities or in large-scale series or that can be exchanged with other virtual assets have a high potential to be considered virtual assets,” South Korean publication Yna.co.kr said in his report.

The guidelines would state that NFTs, when issued in large quantities and for the purpose of being used as a method of payment – ​​direct or indirect, will be classified as “assets”. placing them on par with classic cryptocurrencies.

Web3 companies operating with NFTs have been asked to report any suspicious activity to the FSC.

South Korea has been studying NFTs since 2021, when it began began to consider introducing NFTs into a tax bracket.

A year later, NFTs were used as a way to bring funding presidential campaigns in Seoul.

Given South Korea’s friendly approach towards the digital asset sector, Binance sign a memorandum of understanding with South Korean company YG Entertainment to collaborate on NFTs and other web3 projects in February 2022.

Several research reports in recent times have note that the Asian countries of South Korea, Japan, and India constitute a large and lucrative market for metaverse games, where NFTs play a crucial role as in-game characters and rewards.

The South Korean government is expected to implement its “Virtual Asset User Protection Law,” aimed at regulating the Web3 industry, by July this year.

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