South Korea’s Financial Services Commission (FSC) announced the non-fungible token as a virtual asset.

On June 10, a local media outlet in South Korea, News 1, reported that the FSC will regulate NFTs like cryptocurrencies if they don’t have characteristics that set them apart from virtual assets.

The authorities further announced that the mass-produced NFTs are options to use against paper money and are marked as virtual assets.

NFTs as a Mode of Payment

NFTs are categorized by their values, as stated by the authorities, NFTs without much value will be handled differently. This includes NFTs used for tickets or digital certificates, and In these situations, they are considered general NFTs.

Jeon Yo-seop, Financial Innovation Planning head, explained during an interview that when NFTs are collected in massive quantities and used as a mode of payment, it will be highly profitable.

The official pointed out that if one million NFTs were issued in a collection, there would be a significant number of transactions. In this scenario, the official thinks that the NFTs could be used as a method of payment.

The FSC concluded that the NFTs used for the mode of payment will vary from case to case.  While adopting this procedure, there will be no defined standard to interpret NFT as crypto.

Moreover, the new guidelines also propose that NFTs might be considered as a security if they exhibit characteristics outlined in the country’s Capital Markets Act.

NFTs can Receive Interest

While updating the rules for the implementation of virtual assets in July 2024, the officials of South Korea introduced various policies to help stakeholders implement the country’s law.

The FSC mentioned in the regulations of 2023, that by July, NFTs must receive interest when they add their funds to crypto exchanges. The regulator also defined that regular NFTs and central bank digital currencies (CBDCs) are not eligible for receiving interest.

As the standard NFTs and CBDCs are not included, there are exceptions to this rule. The recent update from the FSC reinforces its statements from last year, indicating that NFTs categorized as virtual assets can earn interest when deposited on exchanges.

This means that the NFTs issued in a massive amount and those used for the payment method are eligible to receive interest.