Southward Korea's Financial Services Commission (FSC) has issued a report outlining its new definition of cryptocurrencies, forth with proposed procedures for token issuers and punishments for non-compliance.

The mooted rules could impose onerous regulations on individuals or platforms that mint non-fine art nonfungible tokens (NFT) intended for trading, too as decentralized finance projects among others.

The Tuesday report by the FSC details items information technology proposed in the Human activity on the Protection of Cryptocurrency Users that have been sent to the National Assembly for consideration.

Information technology lays down rules for token issuers who wish to accept their tokens traded on Korean exchanges and suggested punishments for those the FSC has deemed to be making "undue profit through market place manipulation or trading on undisclosed information."

The written report first addresses token-issuing businesses, which include initial money offering operators, decentralized autonomous organizations, NFT minting services and potentially others.

The FSC would require these entities to submit a white paper, obtain a favorable rating from a recognized token evaluation service, obtain a legal review of the project, and disclose regular concern reports to users.

Previously, the FSC had non recognized NFTs as avails to be regulated, simply that decision changed before this week. It as well considers privacy tokens, such as Monero (XMR) and stablecoins such as Tether (USDT) to exist cryptocurrencies, while central banking concern digital currencies are non.

Related: Mixed messages on crypto tax rules create confusion in South Korea

Failure to comply with the rules would conduct a penalisation of at least five years in prison plus three to 5 times the amount of the "unfair profit" made. Unfair profit would exist considered whatever profit made while the businesses were in non-compliance with the constabulary. These punishments echo those from the existing Upper-case letter Market place Human activity.

The new proposals are in response to what the FSC has evaluated to be deficiencies in the ability of the Special Reporting Act to thoroughly protect investors. The act is the legislation that led to the closure of most of the land's crypto exchanges due to strict requirements to remain in operation.

A well-connected exchange industry insider told Cointelegraph the proposals were positive:

"The new law, once passed, will further promote industry development and help protect digital asset investors."