S. Korean Regulator Says NFTs Are Not Virtual Assets: Report

Seoul will follow FATF guidance on the matter of NFTs and its regulation.

AccessTimeIconNov 5, 2021 at 8:07 a.m. UTC
Updated May 11, 2023 at 6:36 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

South Korea’s 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.

  • “According to the basic position expressed by the International Anti-Money Laundering Organization (FATF), NFTs are not regulated,” the report said citing an unnamed Financial Intelligence Unit (FIU) official.
  • The FIU is the FSC’s 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 FATF’s definition.
  • According to FATF’s latest guidance, NFTs are not virtual assets and don’t fall under its regulatory framework for crypto as long as they are used as “collectibles rather than as payment or investment.” 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.
  • “In 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,” the FIU official said.
  • Despite regulatory ambiguity, the NFT industry has flourished in the intellectual property-rich country, with superstar band’s BTS agency announcing plans to enter the industry yesterday.
  • S. Korea implemented a stringent registration framework for crypto exchanges in September, excluding dozens of firms from operating in the country.



Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Eliza Gkritsi

Eliza Gkritsi is a CoinDesk contributor focused on the intersection of crypto and AI.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.