The Significance The rapid growth of the NFT market poses a wide variety of new regulatory and enforcement risks. And although federal agencies have largely taken a wait-and-see approach to see how the varying uses of NFTs might fit under existing frameworks, prosecutors and regulators are expected to pursue cases involving consumer fraud and potentially money laundering. Attorneys also say cybersecurity and sanctions evasion are two other areas in which the DOJ may seek to get involved. Lawyers who work with NFTs warn that hackers could try to break into digital wallets where they’re stored and steal the tokens. Those looking to evade U.S. sanctions could also use NFTs, similar to how the traditional art market has been used in the past. The NFT craze has also sparked intellectual property issues and opportunities for trademark and copyright litigation, according to Lewis Brisbois Bisgaard & Smith partner Jonathan Goins. Goins said he’d been paying attention to a lawsuit brought by French luxury design company Hermès against NFT digital artist Mason Rothschild for creating and selling MetaBirkins, virtual furry interpretations of Hermès’ high-end Birkin handbag, as minted NFTs. “They sued him claiming that’s trademark infringement. He didn’t get permission or authorization to use the Birkin handbag trademark,” Goins said. “It’s possible they may have a certain First Amendment defense to some of these trademark claims.” The Information
Want to know more? Here's what we've discovered in the ALM Global Newsroom: Is Singapore's New Crypto Legislation a Double-Edged Sword? Robust Regulation Makes Canada Attractive to Global Cryptocurrency Market 'That's Trademark Infringement': NFTs and Emerging Litigation Threats Emerging Field of Real Estate NFTs Poses Unique Challenges For Lawyers, Experts Say NFTs, Crypto Mortgages Could Forever Change the Real Estate Market. Here's What You Need to Know Nike Suit Against StockX Pursues Flawed NFT and Counterfeit Theories The Forecast NFTs are quickly becoming the coin of the realm for most activity in the metaverse, according to James Williams, partner in Arent Fox, making them a critical component for lawyers to understand for their clients. “NFTs are widely seen as the future of commercialization in the metaverse,” he said, explaining that when you buy land in the metaverse, you’re buying an NFT token that represents your parcel of land. “And as creators come into the world and start to develop different use cases, you will see different NFTs deployed on top of the metaverse blockchain to represent different services and goods.” Keeping up with a changing digital landscape is critical. Louis Lehot, a partner with Foley & Lardner in California said that missing opportunities in this emerging field could be catastrophic. In short, “businesses that fail to evolve will cease to be competitive,” he said. |