YEREVAN (CoinChapter.com) – Officials have announced that holders of non-fungible tokens (NFTs) and central bank digital currencies (CBDCs) in South Korea will not receive benefits under the new law. This development has significant implications, and it is important to delve deeper into the details.
South Korea has recently introduced new regulations for digital assets, and these regulations come with certain exclusions. The Financial Services Commission (FSC) of South Korea has specified that investors in digital assets must receive interest on their deposits in South Korean exchanges by July 2024. However, this benefit does not extend to NFTs and CBDCs.
Although NFTs and CBDCs are generally excluded from the interest mandate, there are some exceptions. If tokens are classified as NFTs but function as a payment method and are issued in large quantities, they may be considered virtual assets and become eligible for interest when deposited in exchanges. To ensure investor protection, the new regulations also require exchanges to keep user deposits separate from their own assets and entrust them to a bank.
Furthermore, users must store at least 80% of their virtual assets in cold wallets to enhance security. The FSC has also implemented measures to mitigate risks associated with hacking and cyber vulnerabilities, including the requirement for virtual asset operators to have insurance or accumulate reserves.
These changes are part of broader efforts to regulate the crypto scene in anticipation of the 2024 elections.
The government has also been planning changes in the taxation of cryptocurrency profits. The aim is to integrate digital asset gains into the existing tax system. Additionally, strict anti-money laundering policies will be enforced, with exchanges required to report transactions and maintain detailed user records.
South Korea’s crypto industry is growing, and it holds a significant share in the global market. President Suk-Yeol’s administration has adopted a more pro-business approach, with expectations of easing South Korean crypto regulations to support the growth of the blockchain and cryptocurrency industry. However, the 2024 elections could potentially hinder these plans.
In a setback for President Yoon Suk Yeol, the opposition Democratic Party of Korea recently won a district by-election, which is seen as a precursor to the 2024 general election. The outcome of the April 2024 election will heavily influence the second half of Yoon’s presidency and, consequently, the innovative finance market in the country.