According to blockchain analytics company Dune Analytics statistics, the market for Non-Fungible Tokens (NFTs) plummeted from its peak of $17 billion in early 2022 to $470 million in September 2022, which is a staggering decline of 97%. While the decrease in NFTs transaction volume may be partially attributed to dropping cryptocurrency prices, NFTs developers continue to create NFTs. In fact, creators are confident that the NFTs industry will recover.
Taking the sentiments from the ground and as per the requests from various communities asking about NFTs regulations, I have decided to share some insights on legal implications and the regulatory side of things so that you will be aware and up to speed on the state of the NFTs sector.
Around 105 nations have legalised NFTs either expressly or as part of a larger recognition of cryptocurrencies and virtual currencies. However, as the aforementioned list illustrates, legislation regarding NFTs is frequently general and not designed mainly for NFTs.
The U.S., Canada, Australia and most of the European Union are notable examples of markets that are integrated and moderately regulated. In each of these jurisdictions, the predominant legal strategy is to view NFTs as either a type of capital gains taxable asset or a component of an individual’s income tax portfolio. However, there are still a lot of nations where NFTs and cryptocurrencies are either implicitly or expressly banned. This is largely because those governments view NFTs and other digital assets as threats to the current financial system and sources of illicit and/or terrorist financing. China, Vietnam, Algeria, Egypt, Qatar and Nepal are notable instances.
I will go through a few markets.
U.S.
Although there are no particular NFTs legislations in the US, similar to the UK, some NFTs crypto-asset kinds may be covered by already-existing federal statutes. For instance, the Securities and Exchange Commission (SEC) may treat specific types of NFTs as securities under US securities law.
India
Since there is no official legal framework for NFTs and no classification of NFTs under the SCRA, it is unclear if dealing in NFTs is forbidden under the Securities Contract Regulation
