South Korea’s FSC Introduces NFT Guidelines on Unique Features

South Korea’s Financial Services Commission (FSC) has introduced new guidelines on NFTs, treating some as regular cryptocurrencies if unique features 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 tickets to an event, they will be classified as regular NFTs.

An FSC representative noted that collections of one 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 under the regulatory framework based on a single standard.

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

These guidelines are emerging ahead of South Korea’s new legislation on cryptocurrencies under the Virtual Assets User Protection Law, set to be implemented on July 19. This law was passed in an attempt to prevent 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 users’ deposits in cold wallets to better protect assets and adhere to insurance schemes to cover users in the event of a breach.

This is one of the measures that the South Korean government is implementing to develop a legal framework for the crypto market. Future rules will be aimed at regulating the issuance of crypto-tokens and improving the quality of information provided to investors.

Read too: New York Lawyer Accuses Evolved Apes NFT Creators of Fraud

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