Recent FATF advice updates made it simple for regulators to avoid enacting new laws governing NFTs. The South Korean Financial Services Commission (FSC) stated today in a public statement that nonfungible tokens (NFT) are not virtual assets and would remain unregulated.
The decision to leave NFTs unregulated was confirmed after a review of the Financial Action Task Force’s (FATF) new standards. According to the FATF’s October 28 guideline paper, “NFTs, or crypto-collectibles, are typically not deemed [Virtual Assets] based on their features.”
On November 5, a representative from a branch of the FSC told reporters in a statement: “In light of the FATF’s stance on NFT regulation, we shall refrain from issuing NFT legislation.”
Korea’s financial authority based their judgment on the fact that the FATF defined NFTs as “unique, rather than interchangeable” — which is, of course, the definition of nonfungible — and that they are utilized as collection goods rather than as a form of payment.
Not everyone concurs. According to the South Korean daily Herald Corp, experts think that NFT pricing may be manipulated and exploited for money laundering, and since they are not considered virtual assets, issuers will be exempt from anti-money laundering requirements. Koreans will likewise be exempt from taxes on NFTs, despite the fact that they will be compelled to pay taxes on cryptocurrencies beginning in January 2022.
Dunamu, the parent firm of Upbit, which has a near-monopoly on cryptocurrency trading in the nation, will almost certainly be delighted with the news.
Dunamu and its high-profile new partner Hybe are planning to join the NFT market with memorabilia based on the massively successful K-pop group BTS. Hybe is the group’s entertainment arm, and it recently announced that it will acquire a 2.5 percent share in Dunamu for an estimated $423.1 million. Dunamu would buy a 5.6 percent share in Hybe for $592.4 million as part of the acquisition.
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