YEREVAN (CoinChapter.com) – South Korea NFT and central bank digital currency (CBDC) holders shall not receive benefits under the new law, officials say. Let’s take a closer look at what happened and why it is important.
South Korea Cut NFTs and CBDCs From the Benefits
South Korea recently implemented new regulations for digital assets, which have some specific exclusions. According to the Financial Services Commission (FSC) of South Korea, investors in digital assets must receive interest when depositing their funds into South Korean exchanges by July 2024. However, non-fungible tokens (NFT) and central bank digital currencies (CBDC) are excluded from this benefit.
Despite the general exclusion of NFTs and CBDCs from the interest mandate, there are certain exceptions. For instance, if tokens are classified as NFTs but function as a payment method and are issued in large numbers, they may fall into the virtual asset classification.
In such cases, these NFTs might be eligible for interest when deposited into exchanges. To enhance investor protection, the new South Korea NFT and CBDC regulations also require exchanges to segregate user deposits from their own assets and entrust them to a bank.
Additionally, users have to store a minimum of 80% of virtual assets in cold wallets to increase security. The FSC has also put measures in place to mitigate risks associated with hacking and cyber vulnerabilities, including requirements for virtual asset operators to have insurance or accumulate reserves.
Meanwhile, the changes came amid broader efforts to regulate the crytpo scene ahead of the 2024 elections.
Crypto Regulations Could Change With 2024 Election
Taxation of cryptocurrency profits is another area where the government has been planning to implement changes, integrating digital asset gains into the existing tax system. Moreover, the officials will enforce strict anti-money laundering policies in the sector, requiring exchanges to report transactions and maintain detailed user records.
Meanwhile, South Korea is a growing local market in the crypto industry.
Under President Suk-Yeol’s administration, there has been a shift towards a more pro-business approach, with expectations of South Korean crypto regulations easing and supporting the growth of the blockchain and cryptocurrency industry. However, the 2024 elections could nip those plans in the bud.
South Korea’s opposition Democratic Party of Korea has won a district by-election seen as a warm-up for the 2024 general election, in a setback for President Yoon Suk Yeol. The April 2024 election’s outcome will heavily influence the second half of Yoon’s presidency and, by extension, the innovative finance market in the country.
