Non-Fungible Tokens


Non-Fungible Tokens

Non-fungible tokens (NFTs) use technology just like cryptocurrency, they are cryptographic assets on a blockchain, however, NFTs have unique codes that distinguish them from each other.  Cryptocurrencies are fungible tokens and are identical to each other, as opposed to NFTs which cannot be traded or exchanged for the same thing, as cryptocurrencies.  NFTs are used to certify authenticity and/or ownership of a digital asset, most often pictures, videos and music.  However, developers have found new and useful applications that continue to grow NFTs.  As such, legal considerations continue to expand as well.  Below, we provide at a high level a few potential legal considerations that are top of mind, not only when buying NFTs for creative works but also when selling them.

NFTs, Copyrights and Contract Law

Unless intellectual property rights are explicitly sold or licensed to the buyer, there may be issues down the road in regards to the rights and limitations on usage and exploitation of the particular NFT the buyer holds.  As the seller, it is important to provide clear notice to the purchaser of the rights being obtained, not only to avoid customer confusion, but also other legal battles such as cease and desist, litigation, etc.

Artificial Intelligence (AI) and Machine Learning

Another legal consideration is the use of AI and machine learning to create NFTs or parts thereof.  The main question that comes to mind is whether copyrights even exist on such work.  Nonetheless, this is fact specific and we should look at the totality of the circumstances.


One of the current high risks of NFTs is that if the platform hosting the NFTs goes out of business, you could lose access your NFTs.

Please note that this blog must not be considered as financial and/or legal advice and should be read for informational purposes only.  If you have any questions or require additional information, please contact our office.

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