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Are Non-Fungible Tokens (NFT) Regulated? What Are The Concerns?

Are Non-Fungible Tokens (NFT) Regulated? What Are The Concerns?

The hype around NFT has slowed down. It seemed like NFT was slated for explosive growth in 2022, being named “word of the year” and coming off a record-high volume in January this year. But as it turns out, that was the peak. Looking at Q3 2022 NFT trading volume around the top 8 chains. There is a 76.4% trading volume decrease from Q2 2022 to Q3 2022.

Since then, the trading volume has tumbled 83% from the start of the year, according to Footprint Analytics’s data on CoinGeco. Recent months have logged numbers lower than July 2021, right before NFT summer. Most notably, Ronin and Avalanche have fallen out of the Top 8, replaced by ImmutableX and Panini. Recent sports mania has spilt over to the NFT space, propelling Flow into the Top 3. Solana’s NFT ecosystem doubled its September volume while all its competitors faltered.

During this period of time, where the market is bearish, you will see changes. For example, in Q3 Magic Eden gains grounds on OpenSea dominance. Magic Eden was the only one that saw growth in September, doublings its month-on-month volume and dominance, while the rest of its competitors continued to slip further. Magic Eden (22%) has gained ground on OpenSea’s (60%) dominance, but it remains to be seen if it can sustain its current momentum.

Another factor in sustaining the current momentum is aligning with the regulatory norms. There is still disagreement over how to handle NFTs, which makes it difficult to set clear regulatory norms. NFTs can now be seen in one of three ways: as commodities, securities, or intellectual property. Let’s explore each interpretation in more detail.

Commodities

Commodities are defined by US law as reasonably interchangeable services, goods, and rights, including money and interest rates, that are traded as commercial articles. The Commodity Futures Trading Commission (CFTC) asserts that cryptocurrencies like Bitcoin and Ethereum, as well as renewable energy credits and other intangible assets, are included in the definition of commodity.

If we take NFTs, they resemble cryptocurrencies in several ways. They may be bought and sold and are based on blockchain technology. In addition, the CFTC emphasises price manipulation and commodities exchanges more than it does on underlying assets and issuers. The Commodity Exchange Act (CEA) may be implemented if it is decided that NFTs should be classified as commodities. The CEA’s rules on manipulative trading may be applicable in this situation.

Securities

Most NFTs with a single owner and only one unique asset are unlikely to be securities. However, under certain situations, they might. If an NFT possesses security-like characteristics or otherwise satisfies the Howey test, such as when money or another kind of compensation is invested with a reasonable expectation that gains will result from others’ efforts, then the NFT may be subject to US securities legislation. A case-by-case Howey analysis is essential to ascertain if a specific NFT is a security. NFTs may, however, violate securities laws in the following situations, depending on the specifics:

  • NFTs are pre-sales of digital assets intended to be used on a platform that has not yet been developed, with the sale’s proceeds going toward developing the platform;
  • Digital assets can be “pooled” or “fractionalised” (for instance, in the case of art, when creators pool resources and divide profits, or where several NFTs reflect different investors’ fractional ownership of a single asset);
  • NFTs are a license to a digital asset (like a song) and a portion of its earnings (e.g., a percentage of sales).

Intellectual Property

NFTs might be covered by intellectual property rights such as copyright, design patents, and trademark protections. As a result, buyers of NFTs should be aware of any associated intellectual property rights. In fact, the license that comes with many or even most NFTs merely allows the NFT buyer to use, copy, and display the NFT.

A clip of renowned basketball star LeBron James’ slam dunk is an excellent illustration. The video was made available as a limited-edition NBA highlight video collector. The NBA collectables are available for purchase and sale on the Top Shot NFTs market. The NBA owns the copyright, nevertheless, and the rules of its licensing agreement continue to apply to any purchased item’s replication.

However, while most NFT producers place limitations on commercial use, other authors grant NFT owners broader rights. Members of the Bored Ape Yacht Club (BAYC) have the right to use their “apes” for commercial purposes, which allows them to produce and market hats, T-shirts, mugs, and other items.

Brand owners should consider how current or upcoming design patents can protect against imitations or infringement in addition to trademark and copyright protection. Because they grant owners full ownership of an infringer’s profits rather than just the fraction related to the use of the design, design patents are important intellectual property protections compared to other IP rights.

Fraud Schemes

Despite being a relatively new idea, NFTs are already being utilised to commit numerous forms of fraud. Here, we go over some of the most prominent NFT-related fraud schemes that have occurred:

  • Tokenisation– The process of producing digital tokens that reflect ownership of physical assets is known as tokenisation. This happens when someone steals an artist’s creation without their consent and “mints” it to create an NFT.
  • Wash trading– This is the practice of users manipulating transactions by trading with themselves or others to feign large demand for an NFT, manipulate its price, or enhance its visibility.
  • Insider trading– The practice of using information that is not generally known to benefit personally from it. In recent high-profile situations, employees and executives of NFT companies and markets have engaged in behaviour that may be viewed as unfair or illegal. Various events generate negative press for these organisations. NFT insider trading regulations frequently forbid buying NFTs based on secret information. Similarly, multiple forms of trading in business NFTs that aim to inappropriately manipulate the perceived price or trading volume of such NFTs are prohibited.
  • Anti-Money Laundering– NFTs, especially those with large value, may occasionally be utilised to aid in money laundering. A study on how the art market aids in the financing of terrorism and money laundering was released by the US Department of Treasury. The study covered a variety of topics, including the dangers of financial crimes in relation to digital art and NFTs. The study discovered that the high-value art market has several intrinsic characteristics that could make it susceptible to various financial crimes.

To Conclude

As we can see, the market for NFTs is still growing, and it will take some time until an appropriate regulatory framework for NFTs is put in place. Having said that, governments all over the world have already begun the process of developing NFT norms and standards, proving that they are seriously interested in these digital assets.

Additionally, you should be aware that the phenomenal success of NFTs will undoubtedly result in fraudulent activities. For this reason, it is becoming more and more crucial to conduct your research before purchasing or investing in NFT collections or projects.

 

Source: https://www.benzinga.com/22/10/29371369/are-non-fungible-tokens-nft-regulated-what-are-the-concerns

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

What is CC0 NFT? Are they any good? What are good?

What is CC0 NFT? Are they any good? What are good?

Melos Studio is launching their music NFT + CC0 month. CC0, also known as the Creative Commons, means “no rights reserved” on intellectual property. It’s a type of copyright that allows creators to waive legal interest in their work and take it into the public domain almost instantly.

They have invited the following guests to discuss it.

Yalu – Lin Melos Co-Founder
TP – X2Y2 Co-Founder
Daley – Community Lead of BSC Daily
Anndy Lian – KOL/ Best Selling NFT Book Author “NFT: From Zero to Hero”

A CC0 NFT can be owned by others. Anyone can use the NFT for commercial purposes without attributing it to the original artist or creator. In summary, CC0 NFTs can be seen as open-source IPs.

The sound of NFT on CC0 might sound like it is worthless, and everyone is copying everyone. But it may not be. If more people use the art, CC0 NFTs often become more valuable. If more people pay attention to it, it becomes more valuable. And CC0 incentivizes sharing the project’s art, creating derivatives or monetizing it. This is the point shared by Daley from BSC Daily.

However, Anndy Lian states two critical issues. NFT is still growing, and transforming from a 2D NFT to 3D for another batch of sales looks like a money grab. If the community generally accepts this, we will see more people selling new collections by adding some curly hair to the image. This changed the value totally. Anndy also cautioned that we need to trace back to the original CC0 image to ensure it is copyright-free.

The full discussion can be found at https://twitter.com/i/spaces/1ynJOagNbMlKR.

CC0- Are they any good? What are good? We just got to remind ourselves that NFTs are more than just owning a piece of art, or pure speculations; they are part of a community, where a culture has been created, and culture creates a following.

NFTs have opened a whole new set of opportunities for businesses and creators. You can read more about this topic in Anndy’s new book- NFT: From Zero to Hero at https://books.google.com.sg/books/about/NFT_From_Zero_to_Hero.html?id=OSqFEAAAQBAJ&source=kp_book_description&redir_esc=y

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

What Are The Key Events In September To Look Out For? CPI, The Merge, FOMC & Vasil

What Are The Key Events In September To Look Out For? CPI, The Merge, FOMC & Vasil

September 2022 is going to be exciting. Although historically, this is a bad month for the stock markets. But it is not so for the crypto markets. In my humble opinion, there are a couple of key events that investors should be looking at very closely as they are all interlinked.

Consumer Price Index (CPI)

We are starting with September 13. The U.S. Bureau of Labour Statistics will share the Consumer Price Index (CPI) report.

One of those data points is the August Jobs figures that are already out. A close look at the U.S. labor market data showed that non-farm payrolls rose by 315,000 in August, higher than the estimated 298,000 but lower than the previous month’s 526,000. A strong employment sector means a more resilient economic condition, thus propelling Fed to tackle inflation more aggressively. Analysts also dig into the jobs report for signs of what is happening with wage growth.

The U.S. CPI figures will ultimately assist the Fed in deciding whether to go for a 50bps or 75bps rate hike, together with the jobs data for August that was provided earlier this month. The U.S. inflation rate increased from 8.6% in May 2022 to 8.5% in July and 9.1% in June. The U.S. inflation rate for August may serve as a benchmark for future Fed rate hikes.

Ethereum Merge  

This is a much-anticipated event in the crypto scene for this year. This event has already begun. They have shipped the Bellatrix upgrade, the final update before the Merge itself that is scheduled to happen from September 13-15.

This upgrade will reduce Ethereum’s carbon footprint as crypto mining will be removed, moving the network’s consensus mechanism from Proof of Work (PoW) to Proof of Stake (PoS). This move has also affected Nvidia’s stock price, as they have been a key supplier of mining equipment. The miners are still hopeful, and they think that the fork will continue to keep them in the business. On top of these, there was a lot of news and marketing buzz around the new Eth PoW airdrop. Key opinion leaders are telling all that borrowing as many ETH from AAVE or Compound would make sense before the snapshot as they can expect maximum utilization.

The bullish signs are showing on the charts, with the price of Ethereum going up to 4.98% while Bitcoin remains stagnant.

Federal Open Market Committee (FOMC)

The FOMC holds eight regularly scheduled meetings during the year and other discussions as needed. September 21 is the next meeting.

The Fed Chairman Powell’s “powerful” speech at Jackson Hole on August 26 is primarily to blame for the recent sharp decline in market prices. Powell’s comments were substantially more hawkish than anticipated and alarmed the market.

The market anticipated the Fed to remain neutral after recent inflation statistics revealed that inflation had peaked and prices were dropping. They expected the Fed to keep to its plans to increase interest rates by another 100-120 basis points (1% -1.2%) by the end of 2022, bringing the Fed funds rate to 3.25%-3.5%. At the last FOMC meeting, Powell had also given the market the assurance that the economy would have a soft landing and that no recession was imminent.

Powell used words like “bring some pain to households and businesses” and “very likely be some softening of labor conditions”. Analysts who looked at the speech were reading that the Fed Chair was suggesting the recent fall in inflation was not good enough. To stop inflation once and for all, the Fed was prepared to increase the unemployment rate, reduce wage growth, and sacrifice short-term growth.

For many Americans, the critical question is whether they can continue to keep their jobs, not the increase in rates of September as the Fed bears down on inflation.

The FOMC has raised interest rates four times in 2022 so far. If you are wondering what has the rate got to do with cryptocurrencies. For your information, Bitcoin’s price dipped as low as $17,500 following the Fed’s two-day meeting on June 14 and 15. The Fed raised interest rates by 0.75%. Generally, traders leave the market when interest rates increase, or other markets are impacted, which leads to a sell-off in cryptocurrencies.

Cardano Vasil Hard Fork

The Cardano Vasil hard fork is currently the second most anticipated upgrade in the crypto space, right behind the Ethereum Merge.

Many of us may not know the term “Vasil”. Cardano, ranked 8th on CoinMarketcap is a proof-of-stake blockchain platform: the first to be founded on peer-reviewed research and developed through evidence-based methods.

Vasil is a major upgrade on Cardano, bringing increased network capacity and lower-cost transactions. The upgrade will also bring improvement to Plutus, Cardano’s smart contract platform, to enable developers to create more efficient blockchain-based applications.

Cardano’s ADA token price rose 2.2% in the past 24 hours and 14% in the last week. This upgrade is confirmed to be on September 22.

Impact on the Financial Market

Because Bitcoin is seen as an investment instrument similar to stocks and bonds, the FOMC and macroeconomic pronouncements can greatly impact its price. Numerous studies show that these announcements also impact the financial market as a whole.

It remains to be seen if history will repeat itself and equities will conclude the month of September lower. As additional evidence comes in over the coming months, the idea of a Fed Pivot that was dismissed after Jackson Hole could start to materialize. Investors in the stock market anticipate that the Fed’s decision will provide them with guidance before the results of the upcoming quarter are released and when macroeconomic conditions change in 2023. Perhaps Ethereum and Cardano are the only shining knights in this financial uncertainty.

We will see.

I will end with a quote. “You will most likely come out on top in this bear market if you stick to your financial strategies and maintain your sense. Keep in mind that the people who sow their seeds today can become the millionaires who will profit from the upcoming bull market.”- Anndy Lian

 

Source: https://www.benzinga.com/22/09/28851850/what-are-the-key-events-in-september-to-look-out-for-cpi-the-merge-fomc-vasil

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j