The Financial Services Commission (FSC), South Korea’s financial regulatory body, informed the legislature that it intends to distinguish between digital and virtual assets.
According to a local news outlet, the FSC is of the opinion that non-fungible tokens and virtual currencies shouldn’t be classified as digital assets. The commission is anticipating that the next Digital Asset Act would reflect this distinction made by the nation’s government.
The FSC based its case on the claim that digital assets, which include virtual money and central bank digital currencies (CBDC), should not be used synonymously. The regulator also cited a comparable subcategorization disclosed in U.S. President Joe Biden’s executive order from back in March, pleading with parliament to make sure that South Korea’s legislation is consistent with other countries.
“It is ambiguous whether this is a phrase in the real sense that all NFTs are included in virtual assets or a phrase with a confirmatory meaning that NFTs that meet the definition of virtual assets are virtual assets,”
The Special Financial Transactions Act, which was introduced in 2021 by the South Korean government, gave legal status to the concept of digital assets. According to the law, digital assets like Bitcoin and Ethereum will no longer be referred to as “cryptocurrencies” but rather as “Digital Assets.”
A joint consultative group of the five largest exchanges was known as the “Digital Asset Exchange Joint Consultative Body,” which also implies that crypto exchanges now refer to themselves as digital asset exchanges due to the terminology shift.
After the failure of FTX and Terra, proposals have been made for significant changes to the South Korean Digital Assets Act. Along with term definition changes, lawmakers are pressing for “mandatory separation of deposits” to give regulators more control over initiatives in the sector.
Different terms have been established by financial centres around the world to classify assets in the ecosystem. Any valuable thing represented in computerized or digital form is considered a digital asset, according to the Monetary Authority of Singapore (MAS). Similar to the MAS, Hong Kong’s Securities and Futures Commission (SFC) asserts that all digital representations of value, including digital tokens and virtual currencies, are considered virtual assets.