One of South Korea’s financial services watchdogs has included digital assets and related developments such as the metaverse in its list of sectors which it will keep a closer eye on in the coming year. The Financial Supervisory Service (FSS) is keen to protect consumers at a time when the digital asset industry has seen a great boom in the country
In its annual work plan released this week, the watchdog announced that it will strengthen its supervision of new trading assets, including non-fungible tokens (NFTs), a sector whose rapid surge in popularity has become quite a concern for regulators. It will also be seeking to enhance its supervision of the metaverse, yet another rapidly surging sector that has attracted the attention of some of the world’s biggest companies, not least Meta and Microsoft.
The FSS will prepare countermeasures against factors that cause damage to consumers in this rapidly growing sector, it said on its annual work plan.
The latest revelation is a follow-up on the regulator’s announcement this month that it would heighten its verification of IPOs for businesses in emerging markets, including NFTs and the metaverse.
NFTs have shot to popularity in South Korea in recent times. Despite this, the South Korean government has been adamant against recognizing them as financial assets. In November 2021, the Financial Services Commission (FSC) said that NFTs do not fall under virtual assets and would not be regulated in a similar manner. The FSC said that NFTs were classified as collectibles and not as payment or investment.
“According to the basic position expressed by the International Anti-Money Laundering Organization (FATF), NFTs are not regulated,” an official at the FSC stated at the time.
On the other hand, the metaverse is getting just as much traction in the local market. In October 2021, four metaverse-focused ETFs launched, and as of January, over $1 billion had been reportedly invested.
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