The start of 2021 has seen some of the highest profile sales of NFTs and propelled NFTs to the forefront of public consideration. Individuals and businesses participating and operating in this space should carefully consider the legal implications of doing so, as the laws surrounding NFTs are not yet well-developed and there is a good degree of regulatory uncertainty in the industry.
NFTs are digital assets that represent anything unique (such as artwork, videos, gifs, songs, or even tweets) as an Ethereum-based smart contract. While design flexibility and diverse functionality make NFTs useful to business and brand owners, they also expose NFT handlers to possible government regulation. As NFT sales proliferate, regulators are poised to address the question of how to classify and regulate these novel assets.
Understanding the regulatory regimes that apply to NFT sales requires a detailed inquiry. Managing consumer safety risks on NFT platforms should be carefully planned. Negotiating NFT investments, contemplating NFT portfolio development or other NFT market participation necessitate careful evaluation and due diligence. Crowell & Moring can assist.
Our robust NFT team is led by a former Attorney-Advisor in the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), the Global Head of our Blockchain and Digital Assets Practice and co-lead of our Financial Services Practice, and a leading transactional partner focusing on Digital Assets. Together they collaborate with our advertising and media, corporate, tax, consumer protection, intellectual property, and cybersecurity and privacy lawyers to provide A-to-Z support to businesses and individuals. Our NFT team advises on applicable money transmission, securities, commodities regulation, commercial agreements, copyright protection, and all other facets of the evolving NFT space.
Businesses seeking to maximize their value and reduce the risks partner with Crowell & Moring for our firsthand experience with negotiating commercial interests, our sophisticated depth and know-how concerning the evolving regulations, and our practical understanding of the underlying technologies that drive economics in the NFT industry.