KEY POINTS
- South Korea's NFT-related businesses have pushed back against classifying NFTs as virtual assets
- The country's financial regulator has also warned against brokering overseas-listed spot BTC ETFs
- The ruling and opposition parties have expressed interest in domestic spot Bitcoin ETFs
U.S. Securities and Exchange Commission (SEC) chief Gary Gensler and his South Korean counterpart are set to meet in about three months to discuss non-fungible tokens (NFTs) and spot Bitcoin (BTC) exchange-traded funds (ETFs), local media reported.
The meeting between Gensler and Lee Bok-hyun, the head of South Korea's Financial Supervisory Service (FSS), has been scheduled for May, local Edaily reported Monday, citing reports in the financial industry.
The discussions will center on whether South Korea should include "not only Bitcoin spot ETFs but also NFTs in the virtual asset field," as per a Google translation.
NFTs are not recognized as virtual assets under the Enforcement Decree of South Korea's Virtual Asset Act, which will come into effect in July. With NFTs and spot Bitcoin ETFs gaining ground in the west, the domestic cryptocurrency industry has urged the FSS to define NFTs appropriately since "blindly classifying NFTs as virtual assets could have a fatal impact on related businesses," as per the report.
South Korean businesses working on NFTs have reportedly pushed back against the notion of including NFTs as virtual assets. Such a designation will require NFT-related companies to obtain licenses specific for digital assets. They should also obtain public certification, including Information Security Management System (ISMS) certification. They must also pass screening by the FSS and the Financial Services Commission (FSC). Industry firms have argued that the said requirements mean added manpower costs and other related expenses, the report noted.
As previously reported, Lee revealed during his business plan 2024 discussion in Seoul that he is expecting a meeting with Gensler during the second quarter of the year, noting that the "impact of SEC policy on the world" was important.
He made the announcement several weeks after the SEC approved 11 spot Bitcoin ETFs to an American crypto industry that has been urging the U.S. regulator to establish a business-friendly approach toward crypto regulation.
A day after the SEC's historic move, South Korea's FSC issued a warning to domestic "securities firms," telling them that "brokering overseas-listed Bitcoin spot ETFs may violate the existing government stance on virtual assets and the Capital Markets Act."
It did say it plans to review regulations on virtual assets in the country and abroad, including recent developments in crypto and digital asset regulations in the U.S.
Despite the warning, South Korean's ruling and opposition parties have signaled interest in pushing for the launch of domestic spot Bitcoin ETFs ahead of the April 10 general election. The opposition reportedly pledged to allow investors to buy spot BTC ETFs through their individual savings accounts, while the ruling party reportedly revealed it was looking into ways through which spot Bitcoin ETFs can be allowed in the country.
