South Korea’s Financial Services Commission (FSC) has issued a report outlining the definition of cryptocurrencies. It has also proposed procedures for token issuers and punishments for non-compliance. The proposed regulations could impose onerous regulations on individuals or platforms that mint non-art NFT’s intended for trading and decentralized finance projects, among others. South Korea has been among the top countries that have regulated cryptocurrencies.
The report details items it proposed in the Act on the Protection of Cryptocurrency Users.
The Nov. 23 report by the FSC details items it proposed in the Act on the Protection of Cryptocurrency Users that has been sent to the National Assembly for consideration. It lays down rules for token issuers who wish to have their tokens traded on Korean exchanges and suggested punishments for those the FSC has deemed to be making “undue profit through market manipulation or trading on undisclosed information.” The report also addresses token-issuing businesses, which include ICO operators, Decentralized Autonomous Organizations (DAO), and nonfungible token (NFT) minting services.
The FSC would require these entities to submit a white paper.
According to the report, the FSC would require these entities to submit a white paper, obtain a favorable rating from a recognized token evaluation service, obtain a legal review of the project, and disclose regular business reports to users. Earlier, the financial regulator had not recognized NFTs as assets to be regulated, but that decision changed earlier this week. It also considers privacy tokens, such as Monero, and stablecoins, such as Tether (USDT), to be cryptocurrencies, while central bank digital currencies (CBDC) are not. The FSC noted that failure to comply with the rules would carry the penalty of at least five years in prison plus three to five times the amount of “unfair profit” made.