South Korea Releases Guidelines Defining NFTs and Virtual Assets

The Financial Services Commission and the Financial Supervisory Service of South Korea announced new guidelines today on how to include NFTs in the upcoming Virtual Asset User Protection Act. Previously, the financial authorities announced through the "Enforcement Decree of the Virtual Asset User Protection Act" that NFTs do not belong to virtual assets. This principle has been retained, but for NFTs, they actually have the characteristics of virtual assets and may be considered as virtual assets. Companies issuing NFTs (virtual assets) must report their business as virtual asset business to the competent authority.

The Financial Services Commission has released an NFT guide containing such information. First of all, after the implementation of the "Virtual Asset User Protection Act", NFTs traded for the purpose of "content collection" will be excluded from the scope of virtual assets. For NFTs with unclear boundaries, the application of the law depends on the essence of the NFT, determined in the order of "securities → virtual assets". First, we look at whether the NFT is a security, and then we look at its essence to see if it is a virtual asset.