05/11/2021S. Korean Regulator Says NFTs Are Not Virtual Assets: Report
Seoul will follow FATF guidance on the matter of NFTs and its regulation.
South Koreaâs Financial Services Commission (FSC) reaffirmed its view that non-fungible tokens (NFTs) generally do not fall under the definition of virtual assets and will not be regulated as such, according to a report from the Korea Herald.
âAccording to the basic position expressed by the International Anti-Money Laundering Organization (FATF), NFTs are not regulated,â thereportsaid citing an unnamed Financial Intelligence Unit (FIU) official.
The FIU is the FSCâs anti-money laundering division and the Financial Action Task Force (FATF) is an international governmental body that drafts finance regulation, including on crypto.
However, the official left the door open to NFT regulation in some cases, as outlined in the FATFâs definition.
According to FATFâslatest guidance, NFTs are not virtual assets and donât fall under its regulatory framework for crypto as long as they are used as âcollectibles rather than as payment or investment.â Countries should consider whether NFTs are covered by FATF standards on a case-by-case basis, said the task force.
Some NFTs are only digital collectibles in name and marketing, when in reality they are being used for investment or payment, the FATF warned regulators. Other NFTs that are not virtual assets, but are digital representations of assets regulated by the FATF, the task force said.
âIn order to be used as a payment method, a very large amount must be issued, but there is virtually no reason to make it an NFT that values scarcity,â the FIU official said.
Despiteregulatory ambiguity, the NFT industry has flourished in the intellectual property-rich country, with superstar bandâs BTS agencyannouncingplans to enter the industry yesterday.
S. Koreaimplementeda stringent registration framework for crypto exchanges in September, excluding dozens of firms from operating in the country.