This chapter delves into the intricate relationship between digital assets, specifically non-fungible tokens (NFTs), and the regulatory landscape of anti-money laundering (AML) and counter financing of terrorism (CFT). With the rapid emergence of NFTs, new challenges and opportunities have arisen, necessitating an exploration of evolving regulatory frameworks and enforcement measures to combat AML and CFT risks associated with digital assets. This chapter focuses on the unique characteristics of NFTs, AML, and CFT risks within the NFT market, global regulatory developments, compliance challenges, technological solutions, enforcement actions, collaborative efforts, and future trends. By analyzing these aspects, this chapter aims to provide insights for policy-makers, regulators, scholars, and industry participants in effectively addressing financial crime risks in the digital asset landscape.

In the evolving landscape of technological discourse, non-fungible tokens (NFTs) have risen as pivotal instruments, notably within gaming and digital art. However, their implications are broader, touching upon real-world applications such as land titles and supply chain management. As the Web 3.0 architecture evolves, the role of NFTs in domain nomenclature and email addresses is increasingly significant. Yet, with the existence of alternate methods for these operations, a pertinent question emerges: Why opt for NFTs or blockchain-based solutions? Despite uncertainties surrounding adoption, many early adopters are zealously securing addresses on these avant-garde networks. This chapter delves into the conditions and reasons for considering this nascent technology.

This chapter highlights the dangers of linguistic inaccuracies and misunderstandings that permeate discussions on blockchain technology and non-fungible tokens (NFTs), impacting policy and legal outcomes. It identifies two critical issues hindering effective legislation: a lack of comprehension of blockchain technology’s technical nuances and a failure to appreciate the link between blockchain-related terminology and the intricacies of varying blockchain protocols. By borrowing frequently misused terms without questioning their technical accuracy, policy-makers may unwittingly stifle innovation and develop legal regimes that are ill-suited for their intended purpose. This chapter explores six specific language landmines prevalent in blockchain and NFT discussions, urging researchers, lawmakers, industry members, and other stakeholders to bridge the understanding gap. By addressing these linguistic pitfalls, the chapter advocates for informed and comprehensive policy-making that keeps pace with the evolving landscape of blockchain technology and its applications, including NFTs.

Non-fungible tokens (NFTs) introduce unique concerns related to the privacy of personal data. To create an NFT, users upload data to publicly accessible and searchable databases. This data can encompass information essential for the creation, transfer, and storage of the NFT, as well as personal details pertaining to the creator. Additionally, users might inadvertently engage with technology crafted to gather personal data. Traditional paradigms of privacy have not evolved in tandem with advancements in NFT and blockchain technology. To pinpoint where current privacy paradigms falter, this chapter delves into an introduction of NFTs, elucidating their foundational technical mechanisms and processes. Subsequently, the chapter juxtaposes current and historical privacy frameworks with NFTs, underscoring how these models may be either overly expansive or excessively restrictive for this emerging technology. This chapter suggests that Helen Nissenbaum’s concept of “contextual integrity” might offer the requisite flexibility to cater to the distinct attributes of NFTs. In conclusion, while there is a pronounced societal drive to safeguard citizen data and privacy, the overarching aim remains the enhancement of the collective good. Balancing this objective, governments should be afforded the latitude to equate society’s privacy interests with its imperative for transparency.

Non-fungible tokens (NFTs) built in the blockchain are quietly revolutionizing ideas around digital assets despite their questionable status under current law. The smart contracts that control many NFTs are disrupting the way deals are done. At the same time, disputes regarding NFTs and smart contracts are inevitable and parties will need means for dealing with these highly technical issues. The chapter tackles this challenge and proposes that parties turn to online dispute resolution (ODR) to resolve NFT and smart contract disputes efficiently and fairly. Furthermore, the chapter acknowledges the benefits and challenges of current means for addressing blockchain issues and proposes ideas for how designers could address those challenges and incorporate ODR to provide efficient and fair resolutions.

Non-fungible tokens (NFTs) are used in numerous markets for collectibles, art, securities, and commodities. These are different markets, and there is no regulatory framework for all NFTs. To determine a proper legal regime, it is essential to locate the market to which an NFT belongs. This task requires a deep understanding of the economic realities of the associated rights, assets, and transactions. Economic-reality-based interpretations should provide a solid footing for better regulation of NFTs in the US and other jurisdictions grappling with NFT regulation. The new cryptoasset regime in the EU already incorporates a “substance over form” approach. In the US, courts have been successfully applying the Howey test to examine transactions and schemes and establish whether securities law should apply to cryptoassets. In 2023, the SEC and a US federal district court applied the Howey test to demonstrate why and how securities law built for legacy markets where mainstream assets are fungible could apply to transactions in non-fungible assets. The decisions are an example of establishing economic realities of transactions with novel assets regardless of the underlying technologies on which the assets are built. An economic reality approach should help courts and other policy-makers ascertain to which market an NFT belongs and which corresponding legal regime should govern.

This chapter addresses the phenomenon of unauthorized minting of NFTs. Specifically, the chapter examines whether copyright law should allow minting of NFTs that is not authorized by the author of the underlying work. Despite the immense growth of the NFT market, the answer to this question has remained unclear under extant copyright laws around the world. To provide foundations for policy-making in this arena, the chapter seeks to form a normative stance towards the question of unauthorized minting. It does so by analyzing this question from the perspective of the key theories that underly copyright law, including the utilitarian theory, the labor theory, and the personality theory. The matter is also examined from the viewpoint of cultural diversity and distributive justice considerations, which provide important underpinning for copyright policy. All in all, the analysis offers a normative basis for the conclusion that the right to mint an NFT should be awarded to the author of the work that underlies the NFT.

This chapter delves into the challenges and opportunities surrounding the use of non-fungible tokens (NFTs) as a marketing tool. It explores how advertising and marketing have undergone a transformative shift in the 2020s, fueled by user-generated content and advancements in technology. The rise of the Creator Economy and the significant role of NFTs within this ecosystem are thoroughly examined. The chapter places a specific focus on the connection between NFTs and consumers, with an emphasis on early adopters and younger generations such as Gen Z (born between 1996 and 2010) and Gen Alpha (born between 2011 and 2025) consumers. It delves into their preferences, perspectives, and interests in NFTs, while taking into account the broader landscape of the evolving Creator Economy. Ultimately, the chapter advocates for marketers to understand the immense potential of NFTs and embrace consumer empowerment. By doing so, they can navigate the Web 3.0 era effectively and harness the power of NFTs to drive engagement and establish meaningful connections with their target audience.

The market of non-fungible tokens (NFTs) is rapidly growing and their potential uses and applications are still being discovered. The rapid growth of this market, coupled with the unique nature of NFTs, which do not fit squarely within the existing regulatory frameworks, creates a regulatory gap between existing and effective regulation of NFTs. This gap, in turn, creates a policy-making dilemma: on the one hand, regulating NFTs too quickly could prevent efficient uses and applications from being discovered and deployed, thus stifling innovation. On the other, leaving NFTs unregulated could leave investors unprotected from the risks posed by this innovation. With this dilemma in mind, this chapter argues that regulation of NFTs should occur sparingly, and to the extent that it does occur, regulatory experimentation and competition emerges as the most promising approach. In the US, one place where regulatory competition exists is between and among the states. State regulation in the areas of securities and virtual currency and money transmission can be used to address some of the prominent present concerns posed by NFTs, such as frauds and money laundering, and states have the opportunity to experiment as NFTs evolve and are refined.

This chapter delves into the future of the complex and evolving world of non-fungible tokens (NFTs), focusing on their potential to drive mass adoption of blockchain technology. Beginning with some historical context, the chapter explores the rapid growth of NFTs in the digital art and collectibles space, most notably during the speculative boom in 2021–2022 and the subsequent crash. The chapter then investigates how NFTs might expand beyond these initial use cases. It describes major developments in technology, business models, and financial infrastructure that will support further evolution of NFTs. Using real-world examples, the chapter then discusses emerging categories of NFT use cases, such as tokenization of physical assets, ticketing, and digital identity. It concludes by emphasizing that the true mass adoption of NFTs will occur when the technology becomes invisible and the primary draw becomes the value of use cases, not the novelty of NFTs themselves. While one should be skeptical about specific predictions for massive NFT adoption, this chapter shows that the capabilities NFTs provide are poised to add value in a wide variety of contexts.

Copyright law safeguards the exclusive rights of authors to their intellectual creations, emphasizing reproduction, public display, and adaptation. A fundamental distinction within this realm is between the intangible creative work and its tangible representations. Owning a tangible embodiment (like a painting) does not grant rights to reproduce the intellectual work it embodies. This demarcation is critical in the dynamic landscape of non-fungible tokens (NFTs), as acquiring an NFT does not automatically confer rights to the associated work. Instead, rights hinge on explicit contractual terms accompanying the NFT transaction. As the world of NFTs continues to unfold in all sorts of directions, delving deep into the intricacies of copyright law is important for artists, investors, and legal practitioners navigating the digital frontier. This chapter offers insights into the various copyright implications associated with NFTs.

In an era where two-fifths of the global population is engaged in gaming, this industry’s technological and economic evolution is of paramount importance, promising continued growth. Beyond mere entertainment, gaming has become a primary medium for social interaction, enriched by technologies like virtual, augmented, and extended reality. Gaming has increasingly become intertwined with the financial market as game developers shift their focus from gameplay enjoyment to monetization of in-game assets and some players prioritize the potential for livelihood in gaming. This transformation has been accelerated by the integration of blockchain, decentralized finance (DeFi) protocols, and non-fungible tokens (NFTs), which provide users with more control over their in-game assets and enable external trading of such assets in the secondary market. This chapter delves into this integration, examines its impact on the gaming industry, and provides a high-level overview of key related legal and ethical issues that warrant further exploration.

As blockchains in general and NFTs in particular reshape operation logistics, data creation, and data management, these technologies bring forth many legal and ethical dilemmas. This handbook offers a comprehensive exploration of the impact of these technologies in different industries and sectors, including finance, anti-money laundering, taxation, campaign-finance, and more. The book specifically provides insights and potential solutions for cutting-edge issues related to intellectual property rights, data privacy and strategy, information management, and ethical blockchain use, simultaneously presenting insights, case studies, and recommendations to help anyone seeking to shape effective, balanced regulation to foster innovation while safeguarding the interests of all stakeholders. This handbook sets out an invaluable roadmap for navigating the dynamic and evolving landscape of these new technologies.

The chapter explores the profound implications of non-fungible tokens (NFTs) within the context of the Web 3.0 movement and the burgeoning metaverse landscape. While NFTs have already found some economic traction in analog settings, their potential is most transformative in a purely digital realm. NFTs offer unparalleled provenance and tradability for digital assets, circumventing centralized intermediaries. The metamorphosis of NFTs and their role in the emergence of the metaverse will determine their full impact. As metaverse platforms evolve, enabled by NFT interoperability and consumer trust, they are poised to reshape the leisure economy and extend into education and employment. The true value of NFTs lies in their integration into an interconnected, dynamic virtual world revolutionizing various facets of society. While existing regulations provide a framework, they will inevitably adapt if and as the metaverse gains prominence, necessitating agile regulatory responses to this transformative landscape.

"Recent years have witnessed the rise of non-fungible tokens (NFTs) as vehicles for non-investment finance, including in nonprofit and political fundraising. As with other financial sectors in which NFTs have a role, the use of NFTs in financing nonprofits and political campaigns and committees has revealed gaps and ambiguities in existing legal regulatory systems. Appetite exists to evolve legal frameworks to complete and clarify applicable bodies of law and regulation.

Blockchain-based fundraising transforms the way issuers raise capital from the public, promising to reduce transaction costs, expand financial access, and reshape issuer-investor interactions. Despite these promises, the blockchain finance market is currently plagued by severe asymmetric information and is rife with fraudulent and low-quality issuers who exploit this friction. This chapter explores the reasons for the severe asymmetric information in this market and discusses the extent to which signaling and analysts can address it. It suggests that the effectiveness of signaling is limited due to the low costs of producing and disseminating signals and investors' inability to verify biased signals ex ante and punish biased signals ex post. These limitations make analysts a vital source for reducing asymmetric information but they, too, appear to suffer from significant problems – ranging from conflicts of interest to lack of transparency to low competence and expertise – which hinder their effectiveness in reducing asymmetric information. The chapter concludes with the policy implications arising from these observations, which can also guide policy-makers in addressing emerging blockchain-based fundraising mechanisms, such as non-fungible token (NFT) offerings.

The digital asset landscape is rapidly evolving, despite recent volatility exemplified by the collapse of FTX in 2022. However, the taxation of cryptocurrencies remains a contentious topic, raising questions about how these financial instruments should be taxed. While the IRS has not signaled any immediate changes to the tax code, arguments persist for new tax specifics. This chapter presents the case for integrating fresh tax regulations into the code, catering to both academics and practitioners. Exploring the complexities of taxing cryptocurrencies, it considers factors such as classifying tax liabilities for various digital assets and understanding the implications of crypto transactions on taxable events, and delves into the challenges faced by tax authorities in monitoring decentralized and pseudonymous cryptocurrency transactions. With a focus on bridging theory and practice, the chapter offers practical insights for implementing effective taxation policies for digital assets. It aims to guide policy-makers and taxpayers in navigating the dynamic cryptocurrency landscape. Additionally, it advocates for an updated tax code that aligns with the evolving nature of the digital asset ecosystem. By providing a comprehensive economic rationale, it contributes to ongoing discussions on cryptocurrency taxation, fostering an efficient and equitable tax framework tailored for NFTs and digital assets.

For better or worse, non-fungible tokens (NFTs) are the most peculiar and least expected art market innovations of the early twenty-first century. This chapter provides a brief history of NFTs and the NFT market, beginning with the invention of blockchain technology, through the creation of the Bitcoin, Namecoin, and Ethereum blockchains, and the NFT phenomenon. It describes a selection of NFT projects and artists and provides a theoretical account of both the art market and the NFT market.