South Korea is looking at taxing non-fungible tokens (NFTs) in the wake of the recent controversy over the country’s cryptocurrency rules. NFTs are virtual collectibles that are linked to real-world items such as games, artwork, and music, among others, and whose ownership is secured and transferred via blockchain technology.
The country intends to tax revenue derived from the purchase or sale of virtual assets under one of its current laws. In South Korea, the Act on Specified Financial Transaction Information is being examined as a way to tax NFTs. It focuses on a reporting system for bitcoin exchanges and describes cryptocurrency as a “virtual asset.”
The information was provided to the media this week by Doh Kyu-sang, deputy chairman of the Financial Services Commission of South Korea (FSC), according to The Korea Herald.
Regulation of the NFT space has been a source of contention in South Korea for quite some time now.
Last month, during a parliamentary audit session, finance minister Hong Nam-ki stated that NFTs should not be classified as virtual assets, which contradicts the FSC’s current position on the subject.
NFTs are not virtual assets, according to the FSC, and will not be regulated.
The judgment was made based on the Financial Action Task Force’s analysis at the time (FATF). The 2019 advice for virtual assets and virtual asset service providers has been updated to include a risk-based approach (VASPs).
“Depending on their qualities, NFTs, or crypto-collectibles, are typically not deemed to be (Virtual Assets),” according to the paper.
According to The Korea Herald, certificate holders of virtual assets must pay a 20% tax on profits exceeding $2,102 (approximately Rs. 1.5 lakh) from selling the assets, such as NFT artworks by a famous artist.
In South Korea, the cryptocurrency industry is being closely scrutinized.
In September of this year, the government enacted new legislation requiring crypto exchanges to register with the Financial Intelligence Unit and collaborate with banks to verify real-name accounts.
Customers of over 60 cryptocurrency exchanges in South Korea have been told that trading services have been suspended in part or whole.
Meanwhile, governments all around the globe are keeping an eye on how to regulate the decentralized finance arena.
In India, the crypto market fell following the Indian government’s announcement of a Parliamentary agenda aimed at banning any private cryptocurrencies from functioning in the nation.