Legal status of Non-Fungible Tokens and sales on marketplaces: The European and U.S. regulatory landscape

Abstract

The concept of Non-Fungible Token (NFT) is complex. To understand the legal definition of an NFT, one must first consider the idea behind NFTs. According to the Treccani Encyclopedia, a Non-Fungible Token (NFT) is defined as “a non-duplicable digital certificate that certifies the originality and unique ownership of a physical or digital asset registered on the blockchain”. When someone buys an NFT, they do not gain ownership of the underlying asset; instead, they acquire specific rights related to it. These assets can be classified into three groups: native digital assets, which have no physical form; assets that do have a physical form; and assets with “variable geometries”, which include digital goods that can be linked to a physical version upon request. Examples of such goods include fashion items, luxury brands, and artwork. For items intended for use in “new virtual dimensions”, like the Metaverse, buyers can also request a corresponding physical item for use in the “real world”. NFTs have gained popularity across markets such as art, fashion, collectibles, and, most recently, sports. Aspects such as their legal status, regulations, and the effects of trading on specialized platforms, particularly regarding exchange value, require careful attention.