Regulating NFTs have been a subject of debate since last year owing to the success of the sector in revenue generation. Financial regulators in different countries have been asked, on several occasions, if NFTs would be regulated, but the answer has always been negative.
The same question was directed to Tharman Shanmugaratnam, one of the executives of Monetary Authority Singapore (MAS). On Tuesday, Tharman received a series of questions from the State’s Parliament on NFTs regulations, and in his response, he made it clear that the MAS has no plans to enforce regulations on the emerging sector.
Singapore Will Take a Neutral Stance on NFTs Despite Popularity
Tharman said that the financial regulator is maintaining a neutral stance on regulating NFTs even though digital collectibles are increasingly becoming popular in the Southeast Asian region. In January alone, almost nine companies joined the NFT industry and metaverse.
The MAS, on several occasions, has warned Singaporeans against investing in the digital asset class, identifying the risks as a deterrent. However, Tharman said that it is not in the financial regulator’s position to tell people what they should and shouldn’t invest in.
Tharman did say that MAS’s stance on NFTs could change in the future, adding that fractionalized NFTs could demand regulatory oversight. The Senior Minister said that NFTs would be subject to licensing like other investment programs if they represent rights to listed shares.
The monetary body has been active in its pursuits to keep the crypto space clean from illicit activities and protect investors. Last month, the regulatory unit published some guidelines authorizing companies to limit their involvement in crypto-related ads.
Alongside regulations, there have been moves to tax NFTs, given the income realized from trading the digital asset class. While Singapore explicitly stated that it won’t regulate NFTs, at least for now, its stance on taxing NFTs is unknown yet.
Fellow Asian country, South Korea, has already assured NFT traders of no income taxation, discarding the rumors that government entities will tax income generated from the sector. The key reason South Korean authorities objected to taxing NFTs was the cumbersomeness involved in drafting a framework for NFT taxation.
Meanwhile, the U.K. authorities seized three NFTs and cryptos worth £5k and arrested three people on attempted £1.4 million fraud earlier this week. According to the HM Revenue and Customs, the seizure serves as a warning shot to those who hide money using cryptocurrencies.
One question that remains unanswered is if the U.K. tax authorities have the right to seize and probe NFTs, given that many countries are still finding the best possible way to regulate and tax the digital asset class.