The Financial Services Commission of South Korea requests a better definition of digital and virtual assets.

The Financial Services Commission (FSC) has stated that it intends to distinguish between digital and virtual assets in a letter to the unicameral legislature of South Korea.

According to local news source News 1, the FSC thinks that non-fungible tokens and virtual currencies shouldn’t be classified as digital assets. The commission is anticipating that the next Digital Asset Act would reflect this distinction made by the nation’s government.

The FSC bases its case on the claim that digital assets, which include virtual money and central bank digital currencies (CBDC), should not be used synonymously. The regulator also made reference to a comparable subcategorization made public in U.S. President Joe Biden’s executive order from back in March, urging legislators to make sure that South Korea’s legal framework is consistent with those of other top nations.

According to FSC, “it is unclear if this is a phrase in the actual sense that all NFTs are included in virtual assets or a phrase with a confirmatory meaning that NFTs that comply with the definition of virtual assets are virtual assets.”

The Special Financial Transactions Act, which was introduced in 2021 by the South Korean government, gave the concept of digital assets legal status. According to the law, digital assets like Bitcoin and Ethereum will no longer be referred to as “cryptocurrencies” but rather as “Digital Assets.”

The nomenclature shift caused Upbit to refer to itself as a digital asset exchange, while the five largest exchanges‘ joint consultative body went under the name “Digital Asset Exchange Joint Consultative Body.”

After the failure of FTX and Terra, proposals have been made for significant changes to the South Korean Digital Assets Act. Along with term definition changes, lawmakers are pressing for “mandated separation of deposits” to give regulators more control over initiatives in the sector.

various legal systems and appellations

Different terms have been established by financial centers around the world to classify ecological assets. Any valuable thing represented in computerized or digital form is considered a digital asset, according to the Monetary Authority of Singapore (MAS). It can be referred to as “crypto assets” when it is implemented on distributed ledgers.

Similar to the MAS, the Securities and Futures Commission (SFC) of Hong Kong claims that virtual assets include all digital representations of value, including virtual tokens and currencies.

The head of Moody’s Investors Service’s division for digital assets, Fabian Astic, explained that “crypto finance and cryptocurrencies are not the same as broader digital finance.” Astic pointed out that they are essentially a type of distributed ledger technology-based digital finance (DLT).