One of the frontrunners in the upcoming South Korean presidential race wants his country to accept the “reality” of cryptocurrency.
Former prosecutor-general Yoon Seok-youl, the leading presidential contender for the main opposition party, told seminar attendees on Sunday that even the United States — even with its key currency, the dollar — accepts cryptocurrency as a reality and stays out of the way of transactions. Calling on Korea to follow the U.S. model, he said authorities should craft plans to mitigate the negative side effects of the currencies.
Yoon said cryptocurrencies — and just for accuracy’s sake, he used the terms “virtual currencies” and “digital virtual assets” — ignore the primary functions of central banks, i.e., blocking inflation and stabilizing the supply of legal tender. Accordingly, it’s natural that the existing vested financial order would consider them illegal.
Nevertheless, he said, the government should just acknowledge reality, which would presumably be that crypto is here to stay.
NFT businesses must report, too?
Meanwhile, the Korean business news website Financial News reports that businesses that sell or auction non-fungible tokens, or NFTs, might have to register with the financial authorities under the Act on Reporting and Use of Specific Financial Transactions, just as cryptocurrency exchanges do.
At a special lecture for Luniverse Metaverse Partner’s Day on Friday, lawyer Song Seokhyun said that though the Financial Supervisory Service — Korea’s top financial watchdog — had yet to issue a specific opinion on NFTs, they are nonetheless digital tokens with economic value that can be digitally traded or transferred. Therefore, he argued, NFT businesses may have to report to the financial authorities.
The Financial Transactions Act does specifically exclude “online game money or items, prepaid electronic payment means, electronic currencies, electronically-registered securities, electronic bills and electronic bills of lading” from reporting requirements.
Song warned, however, that as NFTs do not clearly fall under these exceptions, the FSS would likely define NFTs as virtual assets under the act.
Accordingly, businesses dealing in NFTs may be defined as “virtual asset service providers” (VASP) and face reporting and anti-money laundering obligations, said Song.
While simply issuing NFTs would not get you designated a VASP, businesses that sell or auction NFTs after they’ve been issued likely would be.
Things get even more tricky when it comes to NFTs in so-called “metaverses” (BTW, I wonder how that HBO adaptation of “Snowcrash” is coming along). Though the Financial Transactions Act does not define game items as virtual assets, Song said Korea’s Game Rating And Administration Committee doesn’t consider metaverse services that function primarily as social media to be games.
Interestingly enough, the National Assembly Research Service — Korea’s version of the Congressional Research Service — issued an opinion last week that metaverse platforms are not games. The opinion came ahead of the local launch of Roblox, the world’s largest metaverse platform. If Roblox were designated a game, local game regulations banning the sale of in-game items for cash would apply.
Song also warned that the Game Rating And Administration Committee has been refusing to rate games that incorporate NFTs due to gambling concerns. This effectively bans their release in Korea, though major Korean daily Chosun Ilbo notes that NFT game makers have been getting around this by going through open marketplaces such as Google Playstore and Apple’s App Store, much to the committee’s chagrin.