Andrew Lee is of counsel and a litigation and business attorney with Foley & Lardner LLP member of the firm's Business Litigation & Dispute Resolution Practice and is a member of, and Special Advisor to, the Sports & Entertainment Industry Team.
Sellers Beware: Can NFTs Be Regulated Securities?
The sudden prevalence of Non-Fungible Tokens has raised important legal considerations for issuers and purchasers alike. While intellectual property rights remain essential, securities laws should not be overlooked.
Non-Fungible Tokens, or “NFTs”, are digital assets with unique identifying characteristics that distinguish one from another. Unlike Bitcoin and other cryptocurrencies, no two NFTs are identical; this is what makes them “non-fungible.”
NFT holders own what can be loosely analogized to distinct barcodes, encrypted on blockchains. A blockchain, in turn, is a type of digital database that stores data in “blocks” that are “chained” together. Blockchains are often organized in a decentralized manner so that no single person or group has control, making the transactions represented by the chained blocks of data immutable and irreversible. In the case of NFTs, the blockchain data includes a “smart co