Partner Jeffrey Alberts, a co-chair of Pryor Cashman's Financial Institutions Group and the FinTech practice, discussed the latest cryptocurrency to gain popularity, Non-fungible tokens otherwise known as "NFTs." NFTs are considered 'digital collectibles.'
According to CoinDesk, "NFTs are exploding in popularity, but it's unclear how they fit into the existing legal and regulatory frameworks that govern the financial, technology and cryptocurrency industries. NFTs don't behave like initial coin offerings (ICOs), so they can't just be treated like a security. And while there are laws that govern the behavior of NFT activities, it's essential to ensure consumers are aware of what they're doing." The publication details a brief list of considerations for those interested in exploring the newly flourishing cryptocurrency. Alberts' is quoted saying:
Many NFTs represent real-world items, which raises the possibility that the link between a real-world item and the NFT representing it can be broken, Alberts said.
"The real thing that could happen is you would sell something on a website, say that it's an NFT that exists on a blockchain and you're just lying and that's false and most users would have no way of knowing whether that's true or false because they're not sophisticated enough to go and check," he said. "The items could either not be an NFT at all, it could just be a cool-looking image, or it could be an NFT that's tied to a different blockchain."
Read Alberts' full commentary in the full article linked below.
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