South Korea to discuss NFT classification, Bitcoin ETFs with Gary Gensler

Head of South Korea’s Financial Supervisory Service, Governor Lee Bok-hyun, is scheduled to discuss key regulatory issues with U.S. SEC Chairman Gary Gensler in May.

The agenda includes potentially classifying non-fungible tokens (NFTs) as virtual assets and approving spot bitcoin exchange-traded funds (ETFs) in South Korea.

Unlike cryptocurrencies, South Korea does not recognize NFTs as virtual assets due to their perceived minimal impact on financial markets.

South Korea’s stance may change as speculative activities around NFTs increase, aligning with the rising value of major cryptocurrencies. The reclassification of NFTs as virtual assets could extend regulatory oversight to their issuers and distributors, imposing stringent requirements similar to those local cryptocurrency service providers face.

In September 2021, the enforcement of new regulatory standards led to the closure of 34 crypto exchanges; over half of the nation’s platforms could not meet the criteria.

The discussion between Lee and Gensler will cover the potential approval of spot Bitcoin (BTC) ETFs in South Korea, where current regulations prevent local institutions from launching or brokering overseas-based crypto products.

Despite restrictions, South Korea’s major political parties have committed to advocating for the launch of local spot Bitcoin ETFs ahead of the general election on Apr. 10, heightening investor anticipation.

South Korea is also progressing with its cryptocurrency regulatory framework, aimed at investor protection and standardization of crypto token issuance and information disclosure. The first half of this framework is expected to be implemented in July, with further developments ongoing.