The Financial Services Commission (FSC) of South Korea has issued a new directive, set to take effect by July 2024, mandating that investors receive interest on digital assets deposited into exchanges. However, this requirement notably excludes nonfungible tokens (NFTs) and central bank digital currencies (CBDCs).
On December 10, local media reported the FSC’s intention to release this legislative guidance. While NFTs are generally excluded, the FSC pointed out potential exceptions. If tokens, despite being classified as NFTs, are used as a payment method and are issued in large quantities, they might fall under the virtual asset category. In such cases, these assets could qualify for interest accrual when deposited on exchanges.
The FSC’s notice also outlines how virtual asset operators should manage user deposits. It stipulates that exchanges must keep user funds separate from their own and entrust them to a banking institution. Additionally, it requires that 80% of the coins be stored in a cold wallet. The guidance includes protocols for dealing with hacking and other computer-related incidents, requiring virtual asset service providers to either obtain insurance or build up financial reserves.
Furthermore, the new law restricts the ability of exchanges to block deposits or withdrawals, allowing such actions only when absolutely necessary or when mandated by courts and financial regulators.
These developments are part of South Korea’s ongoing efforts to tighten regulations in the cryptocurrency sector. Earlier in December, financial authorities in the country urged the public to report any unlicensed crypto exchanges operating in the region. This initiative is being led by the Digital Asset Exchange Association and the Financial Intelligence Unit of South Korea.
Get $200 Free Bitcoins every hour! No Deposit No Credit Card required. Sign Up