You might expect that the European Commission, eager to act as an innovative regulator, would have non-fungible tokens, NFTs, firmly on their radar and to have dedicated a relevant part of its regulation for cryptoassets, MiCA, on this important phenomenon. Surprisingly, this not the case. MiCA specifically excludes NFTs from its scope and does not provide an answer to any legal question that they entice.

This edition of FinTech Perspectives, looks into the legal implications of NFTs that deserve the legislator’s attention. Before doing so, we will briefly outline the rise of NFTs and re-visit the main characteristics and some of the most relevant use cases.

There is no question that non-fungible tokens are on the up. Global transaction volumes in NFTs have just crossed the US$ 10 billion line; Mike Winkelman’s “Everyday: the first 5000 days” scooped US$ 69 million at Christie’s and the NFT-based play-to-earn game, Axie Infinity, is set to generate a turnover in excess of US$ 1 billion by the end of the year. But it’s not limited to art and games. Supply chain solutions for industrial products as well as proof of provenance for precious goods are being built on NFTs. Considerations for further applications are wide ranging, from securing sensitive data, to managing digital rights and legal documents.

What are NFTs and how do they function?

What are NFTs used for?

Legal questions to be addressed