South Korea’s FSC presents NFT guidelines on unique characters

South Korea’s Financial Services Commission (FSC) has introduced new guidelines on NFTs, treating some as regular cryptocurrencies if their unique characteristics are lost.

According to guidelines, NFTs can be considered cryptocurrencies if they are infinite, standardized, divisible or used for purchase. On the other hand, if NFTs are non-tradable and have little or no monetary value, such as receipts from a transaction or entry tickets to an event, they will be classified as regular NFTs.

An FSC representative noted that collections containing a million or more NFTs could be traded and accepted as payment instruments like cryptocurrencies. However, each case will be considered separately and the FSC will not categorize NFTs as cryptocurrencies within the regulatory framework based on a single standard.

Additionally, the new rules imply that if an NFT meets certain characteristics outlined in South Korea’s Capital Markets Law, it can be recognized as a financial security.

These guidelines emerge ahead of South Korea’s new cryptocurrency legislation under the Virtual Asset User Protection Act, which is expected to be implemented on July 19. This law was passed with the aim of preventing illegal practices in the crypto space such as market manipulation and fraudulent conduct.

Under the new law, crypto service providers are required to keep a large portion of user deposits in cold wallets to better protect assets and adhere to insurance schemes to cover users in case of breach.

This is part of the measures the South Korean government is implementing to develop a legal structure for the crypto market. Future rules will aim to regulate the issuance of crypto tokens and improve the quality of information provided to investors.

Read also: New York prosecutor accuses Evolved Apes NFT creators of fraud

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