Investment Law Dimension of Non-fungible Tokens (NFTs)
DOI:
https://doi.org/10.48614/jlaw.1.2022.4942Keywords:
NFT, NFT projects, investment contract.Abstract
Nowadays non-fungible tokens (hereafter - NFTs) are one of the most popular subjects globally. This is supported by the fact that the total market value of NFTs is “about 31.4 billion USD.” It started at 85.7 million USD in 2020, reaching 19.6 billion USD in 2021.[1] This Article concentrates on the investment law dimension of so called NFT projects within the scope of which NFT collections consisting of many individual NFTs are offered for sale to general public.
The reason for concentrating on investment law is that this is the field which contains the most legal clarity regarding digital assets (although NFTs themselves are not regulated in any jurisdiction). The Unites States Securities and Exchange Commission (hereafter - SEC) has held that digital assets, publicly offered by a digital corporation, constituted investment contracts.[2]However, NFT projects do not constitute corporations. Holding an NFT certifies holding a piece of an NFT collection, not a share in a company. This creates ambiguity whether an NFT project constitutes an investment contract since SEC has not yet issued any guidance regarding NFTs.
This Article discusses whether NFT projects can constitute investment contracts in the context of the USA law. It also analyzes NFTs and NFT projects in the context of the law of Georgia which currently contains no guidelines on digital assets. In this respect this Article will constitute one of the first pieces of research dedicated to analyzing NFTs within the scope of the law of Georgia.
[1] Ibid.
[2] The United States Securities and Exchange Commission, Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO, Exchange Act Rel. No. 81207, 2017, 15, https://www.sec.gov/litigation/investreport/34-81207.pdf [12.06.2022].
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