Nfts
South Korea to unveil strict rules for digital assets, here’s all
The impending enactment of Korea’s Virtual Asset User Protection Act heralds a significant shift in regulatory oversight across South Korea’s digital asset landscape. This legislation aims to impose strict regulations on companies engaged in issuance non-fungible tokens (NFT) classified as virtual assets.
Specifically targeting NFTs with characteristics such as broad issuance, divisibility, and utility as a means of payment, the law aims to improve oversight and protection in the booming NFT market. By requiring companies to report their operations to regulators, the legislation aims to foster greater transparency and regulatory compliance among entities involved in digital asset transactions.
Detailed guidelines and implementation of the law
The enactment of the Virtual Asset User Protection Act on July 19 will usher in a new era of regulatory clarity regarding non-fungible tokens (NFTs) within South Korea. The Financial Services Commission recently published comprehensive guidelines setting out the criteria for classifying NFTs as virtual assets.
While NFTs traded for content collection purposes are excluded from the scope of virtual assets, those with characteristics of securities or serving as a means of payment fall under regulatory scrutiny. The guidelines stipulate various parameters, including issuance scale, divisibility and utility in transactions, to determine the virtual asset status of NFTs. In addition, the law requires operators issuing NFTs meeting the criteria for virtual assets to declare their activities to Regulatory authorities
guaranteeing compliance with the regulatory framework.
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Compliance and reporting obligations for NFT operators
With the release of comprehensive guidelines, operators engaged in the distribution and management of NFTs face a pivotal moment in regulatory compliance. The first step involves a thorough assessment to determine whether the NFTs in question meet the criteria for classification as virtual assets.
If an NFT falls under this designation, operators must examine their business activities to determine whether they encompass trading, exchanging, transferring, storing, brokering or mediating NFT transactions, as set out in the specific NFT law. financial information. Failure to report activities such as virtual asset trading may result in criminal penalties. Operators encountering ambiguity regarding the classification of NFTs are encouraged to seek advice from financial authorities, with upcoming examples shedding light on the judging criteria for individual cases.
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