The authorities of many countries are looking for ways to regulate the NFT market. This is exactly what happened to the authors of the game of the South Korean mobile game Five Stars for Klaytn. Local regulators have banned the operation of the project due to the presence of NFT in it. However, the developers eventually managed to win the court and return the game to the store.
What happened?
To begin with, it is worth briefly telling about the game itself. Five Stars for Klaytn (파이브스타즈) is a mobile online RPG whose economy is based on blockchain technology. Users can turn in-game items into NFT, transfer them to their wallets, as well as exchange and sell them to other players. The project was supposed to be the first big local game using this technology.
The release of Five Stars for Klaytn in South Korea took place on March 30. However, in May, the local Game Rating and Administration Committee refused to assign a rating to the game.
The reason for the failure was precisely the use of NFT in the game. Local authorities do not like this technology because it does not allow tracking transactions and, according to regulators, leads to financial speculation. In its statement, the Committee noted that NFT is a gray area that is difficult to control.
Because of this, the publisher SkyPeople actually lost the opportunity to operate the project on the territory of South Korea. However, the company decided to challenge the decision and filed a lawsuit against the Game Rating and Administration Committee.
While the process was underway, the Five Stars for Klaytn softlonch took place in Australia, the Philippines and Malaysia. In the global version of the game, it was also possible to sell and exchange NFT. However, the authorities of other countries did not prohibit SkyPeople from operating the project.
Court Results and the NFT market in South Korea
At the end of June, the publisher announced that the lawsuit for the suspension of the injunction was finally satisfied. As a result, Five Stars for Klaytn returned to Google Play, and SkyPeople was able to resume support for the game in South Korea.
However, local authorities continue to look for ways to control the NFT market. The main reason is the ability to exchange virtual items for real money. This is exactly what regulators do not like, which prevent local companies from entering a new market.
Despite the difficulties, NFTs are in great demand in South Korea. According to GameLook, since the beginning of 2021, over 5 million residents have bought or sold at least one non-interchangeable token. This is about 10% of the total population of the country.
Also, the cost of NFT in South Korea sometimes significantly exceeds the cost of similar digital items in Europe and North America. That is why local companies want to gain a foothold in the new market by offering new ways to monetize and exchange in-game items.
It is no coincidence that the word Klaytn is used in the name of the SkyPeople project. This is the name of a cryptocurrency that is used to sell and exchange in-game NFTs. After the game was banned, it lost a lot in price, but at its peak at the end of March, the cost of one Klaytn unit was $4.2 (against the current $0.9).
It is still difficult to talk about the future fate and success of Five Stars for Klaytn. It is possible that SkyPeople may again face an attempt to ban by local regulators. In this case, some developers from South Korea may abandon the idea of integrating NFT into their games, despite a certain demand among users.