- South Korea has ruled that user assets, except NFTs, held on an exchange will earn interest starting next year
- The country, however, said that there are special occasions when collectibles will start drawing interest
- South Korea also wants exchanges to store 80% of their funds in cold wallets
The South Korean financial watchdog, the Financial Services Commission (FSC), has hinted at new rules regarding NFTs and other assets stored on a cryptocurrency exchange. The FSC has indicated that exchanges will start paying users interest generated by their assets on the platform. Although it largely exempted NFTs from receiving similar treatment, it said that this may change depending on how the virtual collectible is used.
NFTs Might be Included
According to the regulator, NFTs can earn interest if they’re used to pay for goods and services or are minted in large quantities, as is the case with cryptocurrencies.
Local media outlets reported that the new rules will come into effect in July next year, and they’ll be part of the ‘Enforcement Decree and Supervision Regulations of the Virtual Asset User Protection Act’ that’s yet to be announced. Its contents were drafted by the country’s Financial Intelligence Unit and the Digital Asset Exchange Association.
Apart from ruling on interest on virtual assets, the FSC also said that the upcoming rules will also compel exchanges to separate their funds from those of their users. In a rare twist, the regulator wants exchanges to involve banks in separating user and platform assets.
Don’t Unlawfully Halt Deposits and Withdrawals
The regulator also wants exchanges to insure stored funds, put up measures to mitigate hacks and refrain from unlawfully halting deposits and withdrawals.
The FSC’s move comes five months after the country launched a virtual asset investigation unit and at a time when law enforcement agencies and financial regulators in the U.S. and the U.K. are getting their feet deeper into the web3 space.
With the new rules yet to be officially announced, it’s to be seen how the community will react to some of the requirements, like the interaction between crypto exchanges and banks.
