For the average NFT enthusiast, the difference between a Bored Ape and Bitcoin is quite clear. But for NFT novices and even regulators, distinguishing between these different digital assets and thus creating laws for them, might be a bit trickier. Even as more NFT adoption is secured, many NFT lovers advocate for clearer and better laws for the sector.
Now, at least for the EU, there is some more clarity about how NFTs will be treated. This comes following comments made by an official at the recent Korea Blockchain Week in Seoul.
News About Regulations
According to the official, NFTs will be regulated under the Markets in Crypto Assets (MiCA) laws which were officially announced in June 2022. This law gave a number of stipulations on how crypto ventures that operate in the EU had to meet.
These included having to publish a whitepaper, register with relevant authorities, and maintain bank reserves in the case of stablecoins. Now, the official is claiming that NFTs will be held to the same standard, even though there are some disagreements, even among those close to the situation.
Peter Kerstens, an adviser for technological innovation at the European Commission, has said that the commission has a narrow view of NFTs and how they should be treated.
Initially, many assumed that NFTs would be exempt, given that the final draft of the law stated that unless they also constitute a crypto asset, the requirements do not apply to them. But as Kerstens said in a recent interview, they might still fall under these requirements in practice.
“If a token is issued as a collection or as a series – even though the issuer may call it an NFT and even though each individual token in that series may be unique – it’s not considered to be an NFT, so the requirements will apply,” Kerstens said.
But what does that, and the statements from the official, mean for NFT projects? For starters, it means that NFT projects will have to release whitepapers in order to safely operate in EU countries, a move that Kerstens has deemed ‘silly’. It also means they will have to go through extra steps when it comes to registration with appropriate bodies.
Finally, it means that the MiCA laws, which were created to protect crypto investors, will be blanket applied to a whole other industry.
The Need for Better Laws
With this new development, NFT lovers in the EU and around the world are yet again faced with regulations that do not favour the industry. But what is the cause of all of these? Mostly, this can be attributed to a lack of understanding of the industry.
Most people who are knowledgeable about blockchain can see off the bat why this is not the best idea. But as Kerstens explains, many of the people who are making these decisions are not as knowledgeable. Hopefully, more blockchain education over time will mean better regulations for NFTs.