Korea’s finance regulator confirms that NFTs will not be regulated
South Korea’s Financial Services Commission (FSC) has recently reaffirmed in a public statement that nonfungible tokens (NFT) are not considered as virtual assets, and will therefore not be regulated.
The confirmation from FSC has come following a review of the Financial Action Task Force’s (FATF) updated guidelines that came out on October 28 from FATF. FATF has stated that NFT or crypto-collectibles, “depending on their characteristics, are generally not considered to be virtual assets.”
An official from a branch of the FSC said on November 5 that due to the FATF position on NFT regulation, the agency would “not issue regulations for NFTs.”
Korea’s financial regulator has also focused on the fact that FATF had considered NFTs to be “unique, rather than interchangeable,” and are mostly used as collector items but not as a means of payment that led to the finalization of their decision.
However, not everyone approves the same. South Korea’s newspaper Herald Corp has reported that Korean analysts believe NFT prices can be manipulated and hence they might be used for money laundering. Since they are not regarded as virtual assets, their issuers would not be required to comply with anti-money laundering obligations.
Similarly, Koreans would also not be required to pay taxes on NFTs, although they would need to pay taxes on crypto tokens starting in January, 2022.
Dunamu, Upbit crypto exchange’s parent company, has a near-monopoly on South Korea’s crypto trading. It is likely that the firm would be extremely pleased with the decision.
Dunamu and its new partner Hybe are slated to enter the NFT space together with BTS K-pop group collectiblles. Hybe is a high profile entertainment group that has recently announced that it would buy a 2.5 per cent stake in Dunamu (worth roughly $423.1 million). As part of the big deal, Dunamu would acquire a 5.6 per cent stake in Hybe worth $592.4 million.
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