South Korean regulator and Gary Gensler to discuss NFTs and crypto ETFs: report

The head of South Korea’s financial watchdog is set to meet the United States Securities and Exchange Commission chair Gary Gensler in May this year to discuss classifying non-fungible tokens and approving spot bitcoin exchange-traded funds, according to a local media report.

South Korea currently does not classify NFTs as “virtual assets,” as the government viewed its influence on the financial markets as minimal compared to that of cryptocurrencies, South Korean news outlet Edaily reported.

Governor Lee Bok-hyun of the Financial Supervisory Service is reportedly planning to discuss with Gensler whether NFTs should be legally classified as a virtual asset, as speculative behavior surrounding NFTs has risen alongside the value of major cryptocurrencies.

Classifying NFTs as virtual assets may grant local financial regulators jurisdiction over such tokens, whose issuers and distributors will likely face strict regulatory requirements that were applied to local crypto service providers. When the country’s first set of requirements for cryptocurrency exchanges went live in September 2021, 34 exchanges — accounting for over half of local crypto trading platforms — closed down due to the inability to meet requirements.

Gensler and Governor Lee are also set to discuss the approval of spot bitcoin ETFs in South Korea, according to Edaily. The country restricts local institutions from launching crypto-related products and barred companies from brokering overseas-based spot bitcoin ETFs.

However, both South Korea’s ruling and opposition political parties have announced that they plan to pledge the launch of local spot bitcoin ETFs ahead of the general election on April 10, boosting anticipation among local investors.

Meanwhile, South Korea’s first half of its regulatory framework focused on protecting crypto investors is expected to go into effect in July. The second half, centered around standardizing crypto token issuance and information disclosure, is currently under development.