South Korea to Treat Select 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) leading the charge in drafting these laws. Seoul’s new guidelines will see regulators classify bulk or large-scale non-fungible tokens (NFTs) as regular cryptocurrencies in accordance with the Virtual Assets User Protection Law. 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 an underlying value. Supported in blockchain networks, NFTs can 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 maintain their value. In Web3 ecosystems, such as metaverse-related games, NFTs can be traded and offer holders an immediate liquidity option.

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

The guidelines state that NFTs, when issued in large quantities and for the purpose of being used as a form of payment – ​​direct or indirect, will be classified as ‘assets’. putting them on par with normal cryptocurrencies.

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

South Korea has been researching NFTs since 2021, when for the first time it started to consider bringing NFTs into a tax bracket.

A year later, NFTs were used as a means of bringing financing to the presidential campaigns in Seoul.

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

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

The South Korean government is expected to implement its ‘Virtual Assets User Protection Law’, which aims to regulate the Web3 industry, by July this year.

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