Gary Gensler to engage in talks with South Korea regarding NFT classification and Bitcoin ETFs
South Korea’s Financial Supervisory Service (FSS) Chairman, Lee Bok-hyun, is set to hold discussions with U.S. Securities and Exchange Commission (SEC) Chairman, Gary Gensler, in May to address important regulatory matters. The agenda includes the possible classification of non-fungible tokens (NFTs) as virtual assets and the approval of spot bitcoin exchange-traded funds (ETFs) in South Korea.
Currently, South Korea does not recognize NFTs as virtual assets, unlike cryptocurrencies, due to their perceived limited impact on financial markets. However, this stance may change as speculative activities surrounding NFTs increase, aligning with the growing value of major cryptocurrencies. If NFTs are reclassified as virtual assets, it could result in stricter regulatory oversight for their issuers and distributors, similar to what local cryptocurrency service providers face.
The enforcement of new regulatory standards in September 2021 led to the closure of 34 crypto exchanges in South Korea, with over half of the nation’s platforms unable to meet the requirements. These discussions between Lee and Gensler will also explore the potential approval of spot Bitcoin ETFs in South Korea. Currently, local regulations prohibit domestic institutions from launching or brokering crypto products based overseas. However, despite these restrictions, South Korea’s major political parties have pledged to support the launch of local spot Bitcoin ETFs ahead of the general election on April 10, generating heightened anticipation among investors.
South Korea is also making progress with its regulatory framework for cryptocurrencies, with a focus on investor protection and the standardization of crypto token issuance and information disclosure. The first phase of this framework is expected to be implemented in July, with ongoing developments to follow.
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