South Korea Excludes NFT & CBDC from Crypto Interest Mandate
The Financial Services Commission, South Korea’s financial regulator, announced that individuals investing in digital assets will start earning interest on their deposits on South Korean exchanges by July 2024.
However, this benefit does not apply to non-fungible tokens (NFTs) and central bank digital currencies (CBDCs), as per the FSC’s exclusion. The FSC intends to provide legislative guidance to enforce this rule by the specified date.
On December 10, Financial Services Commission (FSC), stated that starting in July 2024, investors dealing with cryptocurrencies will receive interest on their deposits. However, this benefit will not apply to Non-Fungible Tokens (NFTs) and Central Bank Digital Currencies (CBDCs).
Due to their unique nature and lack of fungibility, NFTs are not considered suitable for earning interest. Their primary purpose is often seen as for collecting and ownership, rather than as an investment asset.
The FSC aims to enforce regulations outlined in the “Enforcement Decree and Supervisions Regulations of the Virtual Asset User Protection Act,” specifying the mentioned details. Deposit tokens associated with NFTs and CBDCs are not considered virtual assets according to the law.
In CBDC’s case, since they are issued by central banks, CBDCs are not considered to be true cryptocurrencies. They are subject to different regulations and oversight than other crypto assets, making them less suited for inclusion in the interest mandate.
Despite the exclusion of NFTs, there are exceptions. If tokens, classified as NFTs, also serve as payment methods and are issued in large quantities, they fall within the virtual asset category. Consequently, they may be eligible to earn interest when deposited on cryptocurrency exchanges.
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