South Korea has issued guidelines to define whether NFTs are virtual assets, and companies that meet the definition need to declare

Mars Finance News, with South Korea's "Virtual Asset User Protection Act" set to take effect on July 19, regulators have issued guidelines on whether NFTs are virtual assets.

Previously, the financial authorities announced through the "Virtual Asset User Protection Act Enforcement Order" that NFTs are not virtual assets. This principle has been retained, but in the case of NFTs, those that actually have the characteristics of virtual assets may be considered virtual assets. Companies that issue NFTs (virtual assets) must report their business to the competent authorities as virtual asset businesses.

The Financial Services Commission published an NFT guide containing such information on the 10th. First, after the implementation of the "Virtual Asset User Protection Act", NFTs that are generally traded for the purpose of "content collection" will be excluded from the scope of virtual assets.

For NFTs with unclear boundaries, the application of the law depends on the essence of the NFT, which is determined in the order of "securities → virtual assets". First determine whether the NFT is a security, and then look at its essence to determine whether it is a virtual asset.

Whether it is a virtual asset is determined based on the following criteria: ① a large issuance volume or large-scale series with high substitutability; ② a situation where it can be divided and its uniqueness is greatly weakened; a direct or indirect payment method for specific goods or services; ④ virtual assets can be exchanged between unspecified people, or can be used to pay for other virtual asset-related goods or services.