Hassan Maishera
FSC Doesn’t Consider NFTs To Be Virtual Assets
South Korea’s Financial Services Commission (FSC) has come out to air its view regarding nonfungible tokens. NFTs have gained massive adoption globally and are viewed as virtual assets since they are hosted on blockchains and have value.
However, South Korea’s Financial Services Commission doesn’t feel the same about NFTs. In a recent report by The Korean Herald, the FSC said NFTs generally do not fall under the definition of virtual assets and will not be regulated as such.
The report said, “According to the basic position expressed by the International Anti-Money Laundering Organization (FATF), NFTs are not regulated.” The Korean Herald cited an unnamed Financial Intelligence Unit (FIU) official in its report.
The FIU is the FSC’s anti-money laundering division, while the Financial Action Task Force (FATF) is a global governing body that drafts finance regulation, including on cryptocurrencies. However, the official said the FSC could still plan to regulate NFTs as the market continues to grow.
Per the FATF’s latest guidance, nonfungible tokens are not virtual assets and don’t fall under its regulatory framework for crypto. The international governing body said NFTs are collectibles rather than payment methods or investment options. Hence, they cannot be regulated or seen the same way as regular cryptocurrencies.
While the regular cryptocurrencies are fungible (means two coins have precisely the same properties), NFTs are nonfungible (no two NFTs have similar features). However, the FATF warned that some NFTs are only digital are disguised as collectibles while, in reality, they are being used for investment or payment.
The FIU official 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 NFT space has grown to become a multibillion-dollar market, with massive adoption within the sporting, movie, arts and music industries.
