South Korea Regulator to Scrutinize NFTs and the Metaverse

NFT marketplace activity and interest in the Metaverse continues to draw plenty of media attention. In January, NFT trading activity had hit a record high before slumping in February. In spite of the current crypto market environment, more mainstream players are exploring NFTs and buying land in the metaverse.

As a result of the surge in activity, illicit activity has also been on the rise, forcing regulators to take notice.

Illicit Rises Activity across the NFT Marketplace and in the Metaverse

While the crypto market is no stranger to hacks, NFTs have also become the target of cybercriminals. Art thefts, plagiarism, rug pulls, and wash trading have grabbed the headlines in recent months.

More alarmingly, however, has been an increase in cyber bullying and sexual harassment in the Metaverse. In late January, we reported the South Korean government having to take steps to curb sexual harassment in the Metaverse. South Korea’s Communications Commission set up a council to address user protection in the Metaverse. The council is also to look into sexual harassment, targeting minors.

South Korea was not the first to report sexual in the Metaverse. In December, The New York Times and the MIT Technology Review had both reported cases of sexual harassment in the Metaverse.

Governments from India, the UK, and the U.S are now also increasing scrutiny over NFTs and the Metaverse. China was amongst the first, however, to talk of the risks associated with digital assets and virtual reality.

With iconic fashion brands, fast-food chains, music, and sport entering the Metaverse, greater regulatory oversight is going to be needed.

South Korea’s Financial Supervisory Service (FSS) Gets Active

As regulatory activity picks up, the South Korean government hit the news once more this week. On Monday, the FSS reportedly announced that it will tighten the monitoring of new traded assets including NFTs and also the Metaverse.

The news follows the 7 guilty verdicts for V Global executives, including the CEO who received a 22-year jail sentence. In January, news of South Korean prosecutors wanting to put crypto criminals away for life had raised the prospect of heavy sentences for the 7.

Stern punishments and strong regulatory oversight could put South Korea at the forefront of innovation. Addressing the threat of cybercrimes can only be a positive for both the NFT marketplace and the Metaverse.