Legal Issues About NFTs

Abstract

This paper investigates some of the legal issues related to non-fungible tokens, i.e. NFTs. The main feature of non-fungible tokens is their uniqueness together with the possibility of representing any digital resource on a blockchain, thus making it demonstrable and economically evaluable. From a legal point of view, this kind of instrument is alluring even though many look at it with uncertainty. As with any emerging technology, NFTs also present legal issues which need to be addressed as the market continues to grow. These problems deal with the legal nature of NFTs arising the doubt if they are securities or not. One more issue is the potential applicability to non-fungible tokens of the first sale rule. Furthermore, the problems involved also extend to other areas of law. In fact, both issuers and buyers need to be protected. Regarding issuers, the issue of an NFT may require the drafting of an additional contract with a specialised entity. On the other hand, buyers must be adequately informed of the purchase transaction. It follows that all the parties must be aware of the legal challenges involved and work towards establishing best practices and industry standards to address them. Additionally, it is necessary to issue specific legislation that regulates every aspect of the purchase.

Received: 10 February 2024 / Accepted: 29 March 2024 / Published: 5 May 2024