South Korea’s Financial Services Commission (FSC) has stepped into the NFT arena with new regulations. These guidelines aim to clarify the NFT market and protect investors while encouraging innovation.
Fungibility: The Key Concept
The FSC’s approach focuses on fungibility, the ability of NFTs to be exchanged for identical ones. NFTs that are mass-produced and act as payment methods will be treated as virtual assets, similar to cryptocurrencies.
Types of NFT Regulations
The FSC recognizes the diverse uses of NFTs. Unique, non-divisible NFTs with little monetary value, such as concert tickets or certificates, will be classified as “general NFTs” and exempt from stricter regulations. NFTs that resemble securities, as defined by South Korea’s Capital Markets Act, will be classified as such.
Compliance for NFT Businesses
NFT businesses in South Korea must carefully review the FSC’s guidelines to determine if their offerings qualify as virtual assets. Companies dealing in these NFTs must comply with the Specific Financial Information Act, which governs the sale and storage of virtual assets. Non-compliance could result in penalties.
South Korea’s NFT Market: A Growing Force
South Korea’s NFT market is projected to grow significantly, with a compound annual growth rate of 34%. The number of NFT owners in the country has surged in recent years and is expected to continue growing.
