South Korea Sets Rules Regarding NFTs As Virtual Assets

Bittime -South Korea has just issued guidance to determine whether Non-Fungible Tokens (NFTs) fall within the scope of their “Virtual Asset User Protection Act,” which will come into effect on July 19, 2024.

Previous Views and New Clasifications

Previously, the “Virtual Asset User Protection Act Enforcement Regulations” categorized NFTs outside the scope of virtual assets. However, the new guidelines introduce a more nuanced approach.

While the core principles remain unchanged, the guidance recognizes that certain NFTs may have characteristics of virtual assets and require regulation.

Identifying NFTs as Virtual Assets

The guidelines outline three main characteristics that classify NFTs as virtual assets:

• Publishing on a large scale: If an NFT is issued in large quantities, similar to cryptocurrencies in general, it can be considered a virtual asset. This is in contrast to unique and irreplaceable NFTs that represent a single work of digital art.

• Divisibility: Similar to Bitcoin which can be divided into smaller units (Satoshis), the divisibility of NFTs will categorize them as virtual assets. This characteristic is not common for most NFTs that are intended as whole units.

• Payment tools: If an NFT is designed and used primarily to make payments, it will be considered a virtual asset, similar in function to cryptocurrencies.

NFTs with Unclear Boundaries

For NFTs that do not clearly exhibit the characteristics mentioned above, the guidelines propose a tiered approach to determine their classification.

• First Effect: Authorities will first assess whether NFTs fall within the definition of securities. It considers factors such as investment contracts and profit expectations.

• Virtual Asset Classification: If not considered a security, the essence of the NFT will be analyzed to determine whether it functions as a virtual asset based on its characteristics and purpose.

Impact on NFT Business

Companies that issue NFTs with virtual asset characteristics need to register as virtual asset operators with the Korean authorities. This would bring them under the regulatory umbrella of the “Virtual Asset User Protection Act.”

Conclusion

These guidelines provide much-needed clarity for the growing South Korean NFT market.

Businesses and investors can now operate with a better understanding of the regulatory landscape surrounding NFTs and their potential classification as virtual assets.

How to Buy Crypto on Bittime

You can buy and sell crypto assets in an easy and safe way via over. Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti.

To be able to buy crypto assets at over, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet.

For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application.

Study Complete Guide How to Buy Crypto on Bittime.

Monitor graphic movement Bitcoin (BTC), Ethereum (ETH), Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.