South Korea’s Financial Supervisory Service (FSS) has clarified its role regarding the rumored removal of numerous digital assets from local crypto exchanges

On June 17, reports emerged that the FSS had instructed registered crypto exchanges, including Upbit, Bithumb, and Gopax, to evaluate several tokens on their platforms. This directive aligns with the Virtual Asset User Protection Act, which mandates stringent compliance and regular assessments of listed tokens.

Under the new law, exchanges must follow stricter guidelines for token listings and reassess existing tokens biannually. They are required to evaluate the reliability of the issuing entity, user protection measures, technology, security standards, and regulatory compliance of these digital assets.

The legislation also enforces severe penalties for non-compliance, including a minimum one-year jail term or fines ranging from three to five times the illegal profits they generated from the venture. Consequently, investors worry that as many as 600 altcoins may face delisting during these reviews, triggering mass panic selling.

In response to these rumors, the FSS denied direct involvement in listing or delisting virtual assets on exchanges. The regulator emphasized that it is limited to establishing listing standards, not overseeing the review process. It stated:

“Financial authorities inspect virtual asset operators and do not directly review stocks. We participated [in the initial processes] because there was a request to provide support in creating best practices, but the announcements will be made by the exchange and DAXA.”

Additionally, there are reports that the FSS intends to create a new division dedicated to crypto regulation. This division would be responsible for policy development, regulatory oversight, and establishing a framework for the burgeoning sector.

South Korea has taken a significant step towards the regulation of digital assets, including NFTs (Non-Fungible Tokens) in a new set of guidelines. 

According to the Yonhap news agency, on Monday the Financial Services Commission (FSC) of South Korea announced that it will treat some NFTs like regular cryptocurrencies, introducing a regulatory framework aimed at governing the growing market of mass-produced NFTs.

The context of NFTs and the need for regulation in South Korea

NFTs are unique digital assets that use blockchain technology to certify the ownership of a digital object, such as artworks, music, videos, and other digital content. Unlike traditional cryptocurrencies like Bitcoin and Ethereum, which are interchangeable with each other, each NFT has a unique digital signature that guarantees its uniqueness. 

This characteristic has made them particularly popular in the world of digital art and collecting, leading to an exponential increase in their use and exchange.

With the rise in popularity of NFTs, concerns have emerged regarding the lack of regulation in the sector. 

The absence of clear regulations has raised questions about consumer protection, money laundering, and other illegal activities. In the face of these challenges, the Financial Services Commission of South Korea has decided to intervene to create a safer and more transparent environment for investors and market participants.

The new guidelines from the FSC mainly concern mass-produced NFTs that have become tradable like cryptocurrencies. According to the regulation, these NFTs will be subject to the same rules that govern traditional cryptocurrencies. This means that NFT exchanges will have to comply with anti-money laundering (AML) regulations and know-your-customer (KYC) requirements, in order to prevent the misuse of digital assets.

Furthermore, the FSC emphasized the importance of a clear definition and classification of NFTs. Mass-produced NFTs, that is, those created in large quantities and intended for frequent exchange, will be treated differently from unique or rare NFTs. This distinction aims to ensure that only NFTs that present significant risks are subject to regulation, avoiding unnecessary burden on other types of NFTs.

Implications for the NFT market

The introduction of these new guidelines represents an important step for the NFT market in South Korea. On one hand, the regulation offers greater protection for consumers, reducing the risk of fraud and other illegal activities. On the other hand, it could lead to greater transparency and trust in the market, encouraging a larger number of investors and collectors to participate.

However, the regulation could also present some challenges. The operators of the NFT market will have to adapt to the new regulations, implementing adequate compliance systems and ensuring that all transactions are transparent and traceable. This could involve additional costs and require a considerable effort to ensure compliance.

South Korea has long been a leader in the cryptocurrency sector, with widespread adoption and a vibrant exchange ecosystem. The new guidelines on NFTs are just the latest in a series of measures aimed at regulating the cryptocurrency sector in the country. In the past, the FSC has introduced regulations for cryptocurrency exchanges and strengthened anti-money laundering regulations.

The decision to treat some NFTs as cryptocurrencies could also influence other countries, pushing them to consider similar regulations. With the rise in popularity of NFTs globally, many governments are trying to find a balance between promoting technological innovation and protecting consumers.

Conclusions

The publication of the new guidelines by the Financial Services Commission of South Korea marks an important development in the regulation of NFTs. Treating some mass-produced NFTs as traditional cryptocurrencies is a move aimed at ensuring greater transparency and security in the market, while also protecting consumers. Although there are challenges to be faced, this regulation could represent a model for other countries and help establish global standards for the NFT sector.

NFTs have become major players in South Korea’s presidential election race. Even candidate Yoon Suk-yeol has launched his own collection. 

Yoon Suk-yeol launches NFTs for the South Korean elections

Korean Conservative Party candidate Yoon Suk-yeol has launched a special collection of NFTs in the hope of appealing to young people in particular. 

According to reports, Yoon has launched 4,000 NFTs representing him, minted on the Aergo Blockchain, and now for sale on the CCCV marketplace with prices starting at around $40. 

In reality, more than 22,000 of these NFTs are expected to be released in total. 

His main contender, the other candidate Lee Jae-myung, a member of the Democratic Party, like incumbent President Moon Jae-in, had already launched his collection of NFTs both to raise funds and to bring younger people closer to politics. Basically, he accepted donations in cryptocurrency and those who donated received NFTs depicting him in return. 

NFTs in election campaigns

The Korean case is not the only one. In the United States, congressional candidate Shrina Kurani decided to use NFTs in her election campaign, with the aim of demonstrating that the crypto space is not just about crime-related activities.

Elections in South Korea

Returning to South Korea, the presidential elections are close: voting takes place on 9 March and there are 14 candidates contending for the role of head of state. However, the competition is narrowed down to the two NFT-friendly candidates: Yoon Suk-yeol and Lee Jae-myung. Both have no parliamentary experience. 

However, Lee Jae-myung does have political experience, having been mayor of Seongnam and governor of Gyeonggi province. His political offer aims to introduce a universal basic income and to maintain a conciliatory foreign policy with North Korea.

The conservative People Power Party chose former prosecutor Yoon Suk-yeol, who has become a celebrity for his fight against corruption. Despite the fact that the election campaign has suffered several unforeseen events, including the involvement of a shaman, it may please the electorate that wants North Korea to become denuclearized and have more secure borders. 

The scenario is quite unpredictable. These two names have never before gone so far in South Korean politics, so the only certainty so far is that the winner will be a game-changer.

Related posts
More from author