South Korean regulator stalls approval for NFT-based game

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South Korean regulator stalls approval for NFT-based game

By Benson Toti - min read

The gaming regulator said it needed more time to deliberate on the matter

The blockchain gaming industry in South Korea is concerned that regulators may not be ready to work with non-fungible token-based games. Concern arose after the country’s Game Rating and Administration Committee (GRAC) postponed an application for Five Stars, an NTF-based game, yesterday.

Five Stars was developed for the Kakao Klaytn blockchain network, a South Korean tech giant that has been making headlines for its recent forays into the local cryptocurrency industry.

In June, Kakao had its Klaytn blockchain-issued Klay (KLAY) distributed through a local cryptocurrency exchange. It was a bold step forward for the company as initial coin offerings (ICOs) are still illegal in South Korea. Kakao was forced to list KLAY in Singapore and set up Indonesia-based branches for Upbit in order to gather investment for the project.

Inews24, a South Korean online news outlet, reported that the GRAC made the decision to hold off from issuing a rating for the game. The GRAC has not yet provided an official reason as to why they delayed the application.

However, the media outlet postulates that one likely reason for the delay is the Special Payment Act, which is expected to be implemented next year in 2021. The new legislation will build on rules surrounding anti-money laundering (AML) for financial services — including cryptocurrencies. This has led to rumours that basing games on NFT tokens may be required to implement KYC so that users can trade with each other in the future.

Local legislation stipulates that the GRAC must give a rating to all video games created by South Korean firms, regardless of whether they are online or offline before being released to the public.

This is not the first time that a game built on the blockchain has encountered issues with its approval by the gaming regulator. Infinity Start, a game related to NFTs that was manufactured by a local firm named NodeBrick, failed to get the GRAC’s go signal back in 2019.

Inews24 reported that SkyPeople, the developer of Five Stars, submitted its bid for rating approval with the regulator over a month ago and has complied with multiple requests to provide the GRAC with more data on their blockchain functions.

GRAC usually takes 15 days to process and issue ratings.

While the company is still fighting for their case, SkyPeople has described the process as “frustrating” because the regulator said that it needed more time to deliberate instead of refusing outright.