Category: News

As NFTs are becoming more prominent on the world stage, one of the complications that need to be resolved is that of taxes. Because NFTs are so new and digital asset-related taxation policy is complicated on its own, regulators and NFT buyers alike are still figuring out what to do with regard to tax.

Now, just weeks after it released a list of ‘red flags’ to watch out for with NFTs, the J5 has held a meeting to discuss NFTs being used for tax evasion.

A Meeting of the Minds

The J5 stands for Joint Chiefs of Global Tax Enforcement and is an association of the five largest taxation bodies in the world. This latest meeting was held in London and was dubbed ‘The Challenge’.

The goal of the meeting was to discuss emerging threats to taxation around the world, with a focus on the role of NFTs in tax-related crimes. NFTs, and the billions of dollars being spent on them, mean that there is a lot of money in circulation within the industry which might not be subject to the appropriate tax. 

 Adding to this is the fact that many NFT buyers can sign up on marketplaces without having to provide any traceable information to the platforms. They, in turn, do not always provide such information to the taxation bodies in the regions where they operate. 

“NFTs are the modern, digital way of trade-based money laundering. A rising issue is that the platforms involved in the trade in NFTs are not yet obliged to execute KYC measures,” said Niels Obbink, chief and general director, FIOD.

He also added that the nature of blockchain technology means that ‘international cooperation’ will be needed to combat these tax crimes, which the J5 hopes to provide. These sorts of concerns draw parallels to the same that were had about cryptocurrency when it first became popular. 

But as  Jim Lee, chief of the IRS’s criminal investigation division, explained, as more interactions are had with blockchain by-products, a better understanding can be had of how to handle tax-related issues. 

“These Challenges were something new to our organisation when we were first introduced to them a few years ago. But I am confident saying today that we have a good number of cases in our pipeline that we would never have without the work done at these Challenges. It is a model I hope to replicate in other mission areas because of the success and the focus on partnerships,” he said.

Taxman for NFTs

While it is likely that some NFTs are being used for tax-related crimes, it seems law enforcement is fast closing in on this. The increased experience that regulators are having with NFTs and the global sharing of knowledge via organizations like the J5 means that there will be better laws regarding tax. 

This, in turn, will increase public and institutional trust in NFTs. Those who buy NFTs can also be rest assured that they are on the right side of the law with their tax dealings.

One of the most common uses of NFTs these days is in the world of gaming. NFTs have fast become in-game collectables, and tradable characters and many of the top gaming companies now invest in NFTs. 

But regardless of how new NFTs are to the gaming space, launching projects with them still requires due diligence. One gaming company, MetaGravity Studio, learned this the hard way when they released gaming NFTs in April 2022 that they did not yet have the rights to.

Unapproved Gaming

This all started in April 2022 when MetaGravity Studio released a project called Retro Arcade Gaming. This project was comprised of playable NFTs of iconic games. While this is not an unusual practice in the industry, MetaGravity Studio did not get the rights to all the games they were selling. 

More specifically, games like Blizzard’s Blackthorne and Remedy’s Death Rally still had their rights in the hands of the original developers who had not given their permission for an NFT sale.

But why did MetaGravity Studio think they could sell such games as NFTs before approval? Well, in one of the announcements, the games being auctioned off were described as freeware or abandonware.

 Freeware or abandonware refers to games that were either released for free by their developers into the public domain or have been abandoned by the developers with no updates for a long time. This is somewhat tricky as there are sites that sell these games or offer them to the public as a way of ‘preserving’ them. 

The problem with this is that some of these games still have copyright attached to them, regardless of if the developers have not done anything with them for years. There are certainly issues with a company like MetaGravity Studio selling them as NFTs without express consent from their developers. 

Shortly after the collection was released on OpenSea, many of them had to be taken down. MetaGravity Studio then announced to Waypoint that it has “removed all the games and changed the NFTs now to mint passes for our upcoming NFT-native retro game.” 

Moving forward, the company will focus more on its original gaming content that they have the explicit copyrights to. The saga, however, did become a trending topic in both NFT and gaming circles. 

The Case For Copyright 

One of the biggest issues facing creators in the NFT space these days is work being minted and sold as NFTs without the consent of their owners. This has happened especially to artists, with even a recent Chinese court ruling having to address the matter. 

But as the industry is maturing, these incidents are becoming easier to spot and address immediately. In the case of MetaGravity Studio, this brings to light how important copyright is when minting NFTs, even if the content in question appears to be a free-for-all or abandoned. Hopefully, this leads to fewer instances of copyright infringements in the name of NFTs.

As much as they are tools for entertainment and cultural change, NFTs are also investments. The most common way that they are used as investments is by mining a brand new NFT and selling it or buying an existing NFT and reselling it for a profit. 

But as the market continues to innovate, there are new ways of making money from NFTs. one of the latest comes from pop duo The Chainsmokers who have announced the launch of their new album ‘So Far So Good’ with a bit of a twist. 

This twist is that they will be giving away royalties rights to the album via NFTs.

A Piece of Royalty

What is even more remarkable about a group as big as the Chainsmokers giving away royalties is that they are doing so for free. Rather than selling these NFTs, the duo will be giving away the NFTs for free.

This giveaway will be taking place on the Royal marketplace and 5,000 NFTs in total will be up for grabs. These 5,000 NFTs represent 1% of the master royalties for the album. Along with rights to royalties, those who are lucky enough to receive the NFTs will also have access to the group’s private Discord channel.

The NFTs will be released on May 17, 2022, four days after the release of the album itself on May 13, 2022.

Should any of the NFTs be sold in the secondary market, the 7.5% fee charged will not be going to Chainsmokers themselves but divided among the songwriters on the album.

The duo has explained that this effort is more of a way to connect to fans and not a money-making venture for them.

“A number of artists have done this in the past, but not for free. It was important for us to do it this way because this isn’t about profiting off some new tech for us, it’s about connecting more deeply with you and harnessing a new disruptive technology in an effective way that truly shows what is possible as we head towards a Web3 world,” the duo said. 

Musical NFTs

It seems we will be seeing more NFTs in the music industry. As the Chainsmokers themselves have explained, using NFTs to distribute royalties is becoming more common and could be a new way to finance projects by smaller creators or connect to fans by bigger ones. 

The emphasis on compensating songwriters, who are often deemed as the underpaid heroes of the industry, also show that NFTs could be leveraged as a tool to create a fairer musical landscape.

For years in the blockchain community, there have been discussions about the lack of diversity within it. This has included the lack of representation of women and ethnic minorities in blockchain and its sub-industries. And in response to this, several initiatives have been developed to encourage minority representation and participation. 

One of the latest of these efforts comes from the Tezos Foundation, the non-profit arm of the Tezos blockchain. The foundation just recently announced an incoming permanent digital art gallery and NFT collection meant to spotlight underrepresented demographics. 

Diversity on the Blockchain 

This new collection is going to be curated by British photographer Misan Harriman, the first black male artist to shoot the cover of Vogue. According to Harriman, he will focus on collecting pieces from the collection from up and coming artists from Africa and Asia, regions he says are underrepresented in the NFT sector. 

The collection, which is receiving £1 million in funding from Tezos, is expected to launch later this year. While the NFT sector has become a global phenomenon, there is a noted emphasis on artists and creators from the West and this is something this collection hopes to combat.

“As the first curator of this collection I want to make sure the world sees the diverse voices that are making truly extraordinary work with art,” says Harriman. “The Tezos Foundation Permanent Collection will support and celebrate a new generation of artists that have chosen a smart contract-enabled path to be their true selves”. 

Tezos as a whole has been making deliberate efforts to get involved in the art community. Previously, Tezos launched a collaboration with German digital artist Mario Klingemann which debuted at last year’s Art Basel and will be an official partner of the incoming Art Basel events.

This makes sense given how much of the popularity of NFTs have been driven by their use in art, specifically digital art. Despite the global nature of NFTs, many artists from certain regions of the world find themselves shut out of opportunities. The reason for this, Reid Yager, Tezos ecosystems’ global director of communications, is often structural. 

“While the NFT art movement has lowered barriers to entry for artists and other creatives across the globe and ushered in a new medium for the art world, hurdles to adoption such as regulatory and useability concerns remain, and access to cryptocurrencies that power NFTs is fragmented,” he says.

The Age of Inclusion

One of the issues that have plagued the traditional art sector has been the lack of diversity and inclusion of certain demographics. As NFTs emerge in the art world, there is a risk of this pattern repeating itself. This is where projects such as the Tezos permanence art collection come in. 

By focusing on underrepresented demographics, the gap in publicity and earnings can be closed and more talent can be discovered. Hopefully, this new collection leads to even more efforts at including African and Asian artists in the NFT art space.

One of the biggest scandals in Hollywood in the last few months has been the ongoing legal issues of actor Ezra Miller. Several times over the last few months, they have been arrested for all manner of bizarre behaviour on the island of Hawaii. 

These have included throwing a chair at a woman and harassing a couple while threatening to ‘bury’ them, all of which have led to their repeated arrest. The continuous scandals have cast a dark shadow over their career in Hollywood, as well as making international news. 

But could it all be for the sake of NFTs? Well, this could be according to recently released footage of their April 29, 2022 arrest for disorderly conduct at a bar. 

For The Sake of Art

In the video, the actor is being arrested by police after they had harassed several patrons of a karaoke bar and shouted obscenities at them. As they are being arrested, they made a statement about filming their assaults for NFTs.

“I got assaulted and I started filming. Let me show you the video. I got assaulted in this bar, twice in a row. I film myself when I get assaulted for NFT crypto art,” they say in the recording. 

For now, it is unclear what the actor meant by that statement. They have not released any NFT project that is known to the public and while video content is often minted as NFTs, criminal activity like assaults would not likely go down well. 

The rest of the video shows Miller demanding the name of the officers arresting them, expressing disbelief at the arrest, and claiming that they were assaulted by a nazi.

“I claim my 9th amendment rights to not be unlawfully persecuted for a crime of no designation. Disorderly conduct means something I am un-guilty of. I claim my 4th amendment rights to not be searched and seized on no probably cause, that you will not be able to offer in a court of law. I claim my 4th Amendment rights to not be searched and seized,” they are seen saying in the clip. 

Following their arrest, Miller pled no contest to disorderly conduct charges and received a fine of $500. They also had harassment charges dismissed from that bar incident, along with charges of obstruction of a public sidewalk incident from earlier. 

Video NFTs

Miller’s legal trouble in Hawaii aside, it is a bit telling that NFTs, to a degree, are being associated with ‘abstract’ art. One of the beauties of NFTs is that they can be used to tokenize practically any type of content, from videos to tweets. 

A side effect of this, however, is that a lot of content not typically deemed ‘art’ is created as NFTs as well. For example, Madonna’s recent Beeple collaboration and quarantine videos from China. 

And while we might not be getting an Ezra Miller assault video NFT, the industry is certainly creating a space for more niche content to be seen and monetized.

One of the biggest issues facing the NFT sector these days is that of fakes and copycats. The entire concept of NFTs is that they are to be authentic and each unique. At the same time, there are still people who try to flood the market with fraudulent NFTs. 

Whether this is mining the artwork of a creator without their consent and trying to sell it or selling fakes of an already existing NFTs, this issue is one that the industry has been fighting for a while. Now, OpenSea, one of the top NFT marketplaces, is combating them head-on.

New Features on OpenSea

In several new blog posts, OpenSea outlined its new plans to make its platform safer and more authentic. The first is an updated account verification and collection badging system. The current system works similar to the ones on social media sites like Twitter where verified accounts have a blue tick next to their usernames.

However, there have been complaints from users that the process of becoming verified is too slow and vague. In response to this, OpenSea has introduced some changes. 

These include an invite-based account verification system that will extend the chance to be verified to more users, a more streamlined application process, and a dedicated verification team to ensure responses within 7 days.

This change means that more users can get verified on OpenSea and users who want to can do so faster and with more ease. The other major change coming to OpenSea is technology to combat copymints- copies of already minted NFTs.

The way this will be done is through image-recognition technology that will scan every NFT uploaded to OpenSea and match them against authentic collections, beginning with the most copied ones. This will not be a simple match scan as the technology will check for rotations, flips, and so on.

This system will also constantly improve on itself, including with help from a human review team that will train the models and review recommendations. 

All these efforts, OpenSea says, is to make sure that copymints do not find their way unto the site and if they do, they can be flagged immediately. 

“With this system, our long-term goal is two-pronged: first, with help from our community, to eliminate all existing copymints on OpenSea; and second, to help prevent new copymints from appearing in the first place,” the announcement says. 

An End to Fakes?

The issue of fakes exists in every industry where a product, physical or otherwise, is sold. The NFT sector has been dealing with this for years but recent efforts seem to be particularly deliberate. 

With OpenSea’s new changes, it is clear that the issue of copymints is to be stamped out permanently, This is also coming at a good time, given that earlier this year, a Chinese court ruled that an NFT platform was to pay compensation to an artist whose stolen work was sold on their platform. 

Needless to say, the NFT marketplaces are finally pushing back.

Regardless of how you feel about them, it is no secret that NFTs are a hot-button issue online. There are those who defend them furiously and those who hate them with a passion. And if there is anything both camps are good at, it is weighing in on any NFT-related topic in the news. 

It seems footballer Michael Owen learned this the hard way after he made some claims online about the longevity of NFTs’ value. More specifically, the claims made were about his own NFTs and how they cannot lose their initial value. 

Owen in the Hotseat

This saga began on May 9, 2022, when Owen took to Twitter to announce his appearance on a Space to promote his own NFT project. While this is standard for anyone pushing an NFT project, the backlash came after he claimed that his upcoming NFTs were ones that would never lose their initial value.

“My Twitter Space is about to go live, to discuss my NFT project. Despite the critics, my NFTs will be the first ever that can’t lose their initial value,” the former England striker tweeted. 

Soon after the tweet went out, Owen was mocked across social media by people who insinuated that his project was a sham and that he lacked basic knowledge about how NFTs work. While most Twitter debates about NFTs tend to be divided between those who love and hate them, both sides seemed united in their criticism of Owen. 

The backlash was so intense that Andy Green, Owen’s business partner, had to step in to clarify the claims. 

“We cannot guarantee or say that you cannot lose. There is always a chance. There is no such thing in life as no risk propositions. But what we can do is protect the collector as best we can and that’s what the floor price protection will do,” he said.

The incoming NFT project is part of a collaboration with Oceidon and will see 1,233 pieces across five rarity levels being made available for minting. The NFTs will chronicle Owen’s football career and is part of the Oceidon Legends project.

Risks Associated With NFTs

While this saga was quite embarrassing for the project, it did lead to a more widespread conversation about NFTs and how they work. It was even reported that the Advertising Standards Authority (ASA) in the U.K had received a number of comments from the public about the claims made. 

Even the Financial Services Authority (FCA) in the U.K weighed in on the issue and clarified that there are some risks when investing in NFTs.

“There are no consumer protections for those who buy any cryptoassets and NFTs, and they are not FSCS protected. As a result, if you buy cryptoassets you should be prepared to lose all the money you invest,” the statement said.

If nothing else, this episode served to educate people about the nature of NFT investments and dispel any myths about them.

When it comes to success within the blockchain sector, a major contributing factor to a project is the faces behind it. After all, many people know of Binance and Ethereum through their founders who are quite active on social media. A project can do well if the public takes a liking to one of its founders and this can be very good for business. 

At the same time, the actions of a founder or public face can bring harm to a business, as can be seen with the recent revelations from Azuki founder Zagabond revealed his past within the NFT sector.

A Controversial History

This saga began on May 9, 2022, when Zagabond published a blog post titled ‘A Builder’s Journey’ which chronicled his journey thus far as a blockchain entrepreneur. This isn’t unusual for entrepreneurs to do these days but the controversy started when the blog post revealed some of his past projects. 

It came to light that Zagabond was involved in three previous NFT projects before Azuki- CryptoPhunks, Tendies, and CryptoZunks. This, on its own, would not be controversial if these projects were not known to have been abandoned by their founders in the past.

Shortly after the post was published, fans quickly accused Zagabond of being part of rug pull scams. This type of scam is when a project promises to deliver a particular product and ‘pulls the rug’ from under investors by not delivering or delivering a poor product and then disappearing.

This led to q square-off on Twitter with some being convinced that Zgabond had scammed investors and others defending him. Zagabond did come forward to defend himself by participating in a Twitter space with Andrew Yang.

In the Twitter space, he explained that his leaving those projects was not a rug pull but rather him realizing that the product that had been created was not the right fit for its intended market. As for the left, he conceded that handover could have been done more professionally but that it was down to the disconnect between creators and the buyers. 

Despite his explanation, the price of Azuki, which is one of the most valuable NFT collections in the world, took a hit on marketplaces like OpenSea, though fans are confident that it will recover over time. 

The incident, however, did spark discussion about rug pulls and the expectations that buyers have for NFT creators. 

A Duty of Care

Because of the scams that have been run within the NFT space over the years, buyers are quite sceptical and always on the lookout for any signs of foul play. In the case of Zagabond, there isn’t a clear cut opinion online on whether the previous projects were indeed scams or just failed endeavours. 

Either way, there does seem to be greater awareness within the community about what founders owe their customers in the event of a project folding up. Hopefully, this will lead to more communication in these situations moving forward.

It seems that every other week, another football club announces its entrance into the NFT world. Just weeks after Leed City FC announced an NFT collection in support of Ukraine, another club has moved forward with plans to release its own collection, this time in collaboration with PUMA. 

On May 10, 2022, Manchester City Football Club announced that a new NFT collection would be released in collaboration with PUMA as part of the 10th anniversary of the club’s first Premier League title. 

An NFT Moment in History

Along with celebrating Manchester City’s first Premier League title, this collection is also in celebration of the team’s ‘93:20’ moment and will be titled ‘93:20’. The first release in this project has been designed by the artist Musketon and chronicles the club’s success in three drops.

This NFT features a clockwork environment, the Manchester City logo, and the PUMA boot that scored the winning goal 10 years ago. Altogether, the artwork symbolises 93:20, which was when the winning goal was scored.

Finally, the artwork features the PUMA ULTRA Football Boots which will also be released as NFTs. Only 120 pairs will be released on May 13, 2022, on MakersPlace, and will have the same colour scheme as the boots worn by footballer Sergio Aguero when he scored the goal.

Other iconic details to be added are the “Manchester City are still alive here” commentary and the ‘Agueroooooooo!’ chant. This piece serves as not only Manchester City’s continued presence in the NFT collectable world but also as a celebration of a historical moment for both the club and football as a whole.

“We are incredibly pleased to be launching our unique 93:20 piece in collaboration with PUMA, following the success of our three collections to date. This exciting piece continues to demonstrate our ongoing commitment to the NFT and blockchain space, and shows our eagerness to collaborate with renowned talented creators, as well as with our club partners,” says Don Dransfield, Chief Strategy Officer at City Football Group. 

It is also remarkable just how many elements of the iconic Premier League title are being incorporated into this NFT. These include the boots worn to score the goal, the exact minute when the goal was scored, the Manchester City logo, and different memorable lines from the match itself. 

A Place for NFTs on the Pitch

This new collection clearly shows NFTs’ use as commemorative collectables. Usually, such a celebration as Manchester City’s 10th Premier League anniversary would be marked with a physical collectables launch. 

The fact that NFTs were chosen, and the previous success that the club’s NFT collections have seen, show how popular they have become among football fans. Should the use of NFTs by football clubs keep up, we could very well see them become the standard for digital fan merchandise. 

By the next time that a football club wants to commemorate a special event, NFTs could be part of the mix.

A few weeks ago, it was reported that Madonna had paid over half a million dollars for a Bored Ape Yacht Club NFT, adding her to the long list of celebrities who have gotten more into NFTs these days. Well, it seems the singer’s interest in NFTs has expanded beyond just buying them. 

Madonna has announced on May 9, 2022, the release of her very own NFTs, which feature three videos of her. This new NFT project is a collaboration between Madonna and the artist Beeple. 

Madonna in the Metaverse

Those who are familiar with NFTs might remember Beeple as the artist who set the record for the most expensive NFT of all time after his collage ‘Everydays: the First 5000 Days’ sold for a record $69 million. 

Now, he and Madonna have revealed a collaboration that is apparently a year in the making called “Mother of Creation”. The videos each feature a computed generated Madonna giving birth. According to Madonna herself, this is symbolic of not just motherhood but art itself. 

“We set out to create something that is absolutely and utterly connected to the idea of creation and motherhood. The opening of each video is essentially me giving birth. I’m doing what women have been doing since the beginning of time, which is giving birth. But on a more existential level, I’m giving birth to art, and creativity, and we would be lost without both,” she said.

The NFTs will go up for auction on May 11, 2022, on SuperRare. The proceeds from this sale will not be for-profit but will be given to three different charities; The Voices of Children Foundation, The City of Joy, and Black Mama’s Bail Out. In addition to this, a $100,000 donation will be made to each charity by MoonPay. 

It is quite interesting that this collaboration is not-for-profit. Beeple himself has said in the past that the next era of NFTs will be less about speculation and a rush for money but more about its utility. This can already be seen with various companies releasing NFTs that are not being given away for money or are not intended to be used as speculative assets. 

Instead, there does seem to be more awareness of what NFTs can do to raise money for good causes, connect communities, and be useful in other non-monetary ways. 

NFTs; the Next Great Charity Project?

These days, the charity scene is seeing a lot of NFTs. Whether they are being used to raise funds for Ukraine or any other good cause, NFTs have found some use outside being speculative assets. For most of NFTs’ existence in the public eye, this was the narrative that surrounds them but now we seem to be transitioning. 

This period in time has also seen some, including Beeple, predict that the NFT industry will begin exploring a more utilitarian aspect of digital assets. We can certainly see this with the Madonna collaboration and many more are likely to come.