Nonfungible tokens (NFTs) are constantly in the news. NFT platforms are springing up like mushrooms and champions are emerging, such as OpenSea. It is a real platform economy that is emerging, like those in which YouTube or Booking.com gained a foothold. But it is a very young economy — one that is struggling to understand the legal issues that apply to it.
Regulators are starting to take an interest in the subject, and there is risk of a backlash if the industry does not regulate itself quickly. And, as always, the first blows are expected east of the Atlantic.
In this first article devoted to the legal framework of NFTs, we will focus on the application of the digital asset regime and financial law to NFTs in France. In a second article, we will come back to the issues of liability and copyright.
Related: Nonfungible tokens from a legal perspective
A digital asset?
In France, the definition of digital assets includes two types of tokens. On the one hand are utility tokens, i.e., all intangible assets representing, in digital form, one or more rights, which can be issued, recorded, stored or transferred by means of a shared electronic recording device allowing the owner of the asset in question to be identified, directly or indirectly.
NFTs are intangible assets that can be issued, recorded, retained or transferred through shared electronic records.
On the other hand are payment tokens, i.e., any digital representation of value that is not issued or guaranteed by a central bank or public authority, is not necessarily linked to a legal tender, and does not have the legal status of money, but is accepted by natural and legal persons as a medium of exchange that can be transferred, stored or exchanged electronically.
Is an NFT a digital asset under French law?
An NFT is acquired to obtain a property right, but it can also be acquired to claim the performance of one or more services related to that NFT.
Furthermore, an NFT can be seen as a digital representation of value that is not issued or guaranteed by a central bank…