The meeting between South Korea’s Financial Supervisory Service Governor Lee Bok-hyun and U.S. SEC Chairman Gary Gensler in May will focus on key regulatory issues, including the classification of non-fungible tokens (NFTs) as virtual assets and the approval of spot bitcoin exchange-traded funds (ETFs) in South Korea.
Unlike cryptocurrencies, South Korea currently does not recognize NFTs as virtual assets, citing their perceived minimal impact on financial markets. However, as speculative activities around NFTs increase and align with the rising value of major cryptocurrencies, South Korea may reconsider its stance. Reclassifying NFTs as virtual assets could subject their issuers and distributors to regulatory oversight, similar to that faced by local cryptocurrency service providers.
South Korea’s regulatory landscape underwent significant changes in September 2021, resulting in the closure of 34 crypto exchanges that failed to meet new standards. The upcoming discussion between Lee and Gensler will also cover the potential approval of spot Bitcoin (BTC) ETFs in South Korea. Current regulations prevent local institutions from launching or brokering overseas-based crypto products. Still, there is growing anticipation for the launch of local spot Bitcoin ETFs ahead of the general election on April 10.
Additionally, South Korea is 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. Overall, the meeting between Lee and Gensler signals South Korea’s commitment to refining its regulatory approach to cryptocurrencies and related assets in line with global standards and market developments.
