Next May, a meeting is planned between the head of South Korea's Financial Services Commission and Gary Gensler, the chairman of the United States Securities and Exchange Commission (SEC). This session aims to address hot topics in the cryptocurrency industry: the classification of non-fungible tokens (NFTs) and the approval of spot Bitcoin exchange-traded funds (ETFs).
The challenges of classifying NFTs
South Korea does not currently consider NFTs as “virtual assets”, estimating their impact on financial markets to be less than that of cryptocurrencies. However, speculative behavior around NFTs has increased alongside the value of major cryptocurrencies, raising questions about their legal classification.
The potential adoption of NFTs as virtual assets could grant local financial regulators jurisdiction over these tokens, leading to strict regulatory requirements for issuers and distributors, similar to what has been applied to local crypto service providers.
Approval of spot Bitcoin ETFs under discussion
Furthermore, the issue of approving spot Bitcoin ETFs in South Korea will be at the center of discussions. Currently, the country restricts local institutions from launching cryptocurrency-related products and prohibits companies from acting as intermediaries for foreign-based spot Bitcoin ETFs.
The announcement by the ruling and opposition political parties of their intention to promote the launch of local spot Bitcoin ETFs ahead of the April 10 general elections has sparked keen interest among local investors.
Towards a strengthened regulatory framework
The first half of South Korea's regulatory framework focused on protecting crypto investors is expected to take effect in July. The second half, focused on the standardization of crypto token issuance and information disclosure, is currently in development.
This meeting between regulators from two of the world's largest economies marks a potentially historic moment for the future of cryptocurrencies and NFTs. It could not only redefine the classification of NFTs, but also open the door to new bitcoin-related financial products in South Korea, contributing to the maturation and further legitimization of the cryptocurrency space globally.
