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South Korea Introduces Guidelines for NFTs as Virtual Assets

South Korea’s financial regulators have introduced new guidelines for NFTs in preparation for the upcoming Virtual Asset User Protection Act, effective July 19. This update marks a reclassification of NFTs, which were previously not considered virtual assets in South Korea.

The updated guidance specifies conditions under which NFTs will be categorized as virtual assets.

While standard NFTs primarily traded for their collectible value will remain outside the virtual asset framework, those with dual characteristics will undergo closer scrutiny and may be classified as securities or virtual assets based on their inherent features.

Source: Financial Services Commission

Reporting and Compliance Requirements

Entities issuing NFTs are now required to register their operations, with sanctions for non-compliance.

Determining whether NFTs qualify as securities or virtual assets will involve consultation of South Korea’s ‘Token Securities Guidelines’ provided by the Financial Services Commission. This assessment considers the type of content held by investors, with securities legislation applying if the content is deemed a security, irrespective of format or technology.

The Financial Services Commission (FSC) also clarified that NFTs will be individually assessed based on factors such as their exchange potential, mass production, potential for division, and usability in transactions.

Non-compliance with these requirements can result in criminal penalties and the FSC encourages businesses unsure of their NFTs’ status to seek guidance.

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*All investment/financial opinions expressed by NFT Plazas are from the personal research and experience of our site moderators and are intended as educational material only. Individuals are required to fully research any product prior to making any kind of investment.

The post South Korea Introduces Guidelines for NFTs as Virtual Assets appeared first on NFT Plazas.

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