The sale of non-fungible tokens (NFTs) has grown during the COVID-19 outbreak and has recently dominated the press, but are there any legal implications?
Artists, collectors, investors, and corporations have all been hurrying to capitalize on the possibilities of NFTs and have a thorough understanding of the market. With NFT sales already in the billions, the sector is confronted with difficulties like as intellectual property rights, anti-money laundering rules, and estate planning. With India being a huge market for NFTs, it is essential to get in touch with NFT lawyers in India before jumping on the bandwagon.
Copyright: You are not acquiring the digital work itself when you purchase an NFT. The artwork's copyright does not immediately pass with the sale of the NFT. The artist or third-party seller may retain the right to copy, distribute, alter, and publicly display or perform the artwork.
As NFT Legal Consultants in India, we have found the following outstanding legal issues relating to NFTs:
Money laundering - The high value of NFT transactions, along with the widespread usage of cryptocurrencies, raises the question of whether these transactions are being used to avoid antimoney laundering legislation.
Regulatory - Non-fungible NFTs. They cannot be traded or swapped at parity with cryptocurrencies. They are not securities and are not governed by securities laws in many countries. Unregulated NFT transactions, including "wash trading," would be prohibited in traditional investment markets such as equities because they create an illusory image of asset demand.
Tax concerns - Similar to cryptocurrencies, the law has been slow to catch up with NFTs and taxation, with challenges defining where NFTs are located for tax reasons.
Security Concerns- Investors should be cautious of the security risks offered by cyberhacking and other internet hazards. Typically, an NFT and the asset it represents are held separately. While the blockchain ledger is immutable, the digital artwork itself may not be as safe, for example, if it is housed on the servers of an insecure third-party website.
