The recent FATF updated guidance made it easy for regulators to pass on issuing new rules for NFTs.
The Financial Services Commission (FSC) in South Korea reaffirmed in a public statement today that nonfungible tokens (NFT) are not virtual assets, and will not be regulated.
The confirmation of the decision to keep NFTs unregulated came after a review of the Financial Action Task Force’s (FATF) updated guidelines. The October 28 guidance report from FATF states that “NFT, or crypto-collectibles, depending on their characteristics are generally not considered to be [Virtual Assets].”
On November 5, an official from a branch of the FSC said in a statement to reporters:
“Due to the FATF position on NFT regulation, we will not issue regulations for NFTs.”
Korea’s financial regulator focused on the fact that FATF considered NFTs to be “unique, rather than interchangeable,” — which is of course the definition of nonfungible — and are used as collector items instead of as a means of payment to finalize their decision.
Not everyone approves. South Korean newspaper Herald Corp reported that experts in Korea believe that NFT prices can be manipulated and used for money laundering and since they are not considered to be virtual assets, issuers will not be required to comply with anti-money laundering obligations. Koreans will also not be required to pay taxes on NFTs even though they will need to pay taxes on cryptocurrencies starting in January, 2022.
Dunamu, the parent company of Upbit crypto exchange — which has a near-monopoly on crypto trading in the country — will likely be pleased with the news.
Dunamu and its high profile new partner Hybe are set to enter the NFT arena together with collectibles based on the wildly popular BTS K-pop group. Hybe is the entertainment group behind the group and recently announced that it would buy a 2.5% stake in Dunamu, worth a reported $423.1 million. As part of the deal Dunamu will acquire a 5.6% stake in Hybe worth $592.4 million.