Legal status of non-fungible tokens (NFT): current state and prospects of legal regulation

The subject. The paper considers the legal status of non-fungible tokens – a technology that allows to secure and confirm the possession of a certificate that refers to a specific digital object, based on a distributed ledger (blockchain).

The purpose of the article is to research the current state of the legal status of NFTs in the Russian Federation, as well as to determine the applicability of the current Russian legislation to NFTs.

The research methodology is based on the application of methods of systemic and structural analysis, formal logic, as well as methods of legal forecasting and interpretation of legal norms.

The results. There is a lack of comprehensive studies on this issue in legal science. The value of NFT is substantiated through the categories of "rivalrousness" and "scarcity". The process of creating NFT - "mint", that is, the tokenization of a digital object, is described. The legal status of NFT is investigated, as a result of which it is concluded that the token is not equivalent to a digital object, but rather acts as a custodian of information about this object.

Taking into account, firstly, the independent nature of the NFT, which is not only a digital copy of the original work, secondly, the vast scope of utilitarian application and, thirdly, its independent commercial value, it is indicated that in the perspective of the development of legislation and judicial practice, NFT should be regarded as an independent digital asset, the rights to which are subject to legal protection.

Conclusions. At present, Russian legislation does not contain a legal structure suitable for NFTs. The problems of using NFT are highlighted, including the "tokenization" of other people's works, interference in the operation of trading platforms using technical vulnerabilities, as well as fraud. Since NFT can confirm not only the right of ownership, but also represent any subjective right, it is assumed that this technology can be used to maintain decentralized blockchain registries of real estate, shares, members of the society, vote in elections, as well as to verify identity, while simultaneously ensuring the protection of personal data.

1. Zykov D.V. Blockchain and Other Technologies in the System of Traditional State and Legal Institutions. Pravovaya paradigma = Legal Concept, 2021, vol. 20, no. 3, pp. 42–46. DOI: 10.15688/lc.jvolsu.2021.3.7. (In Russ.).

2. Makarov V.O. Transformation of legal procedures influenced by the Internet. Pravo i sovremennye gosudarstva = Law and modern states, 2018, no. 1, pp. 48–55. DOI: 10.14420/ru.2018.1.6. (In Russ.).

3. Savelyev A. Contract law 2.0: ‘Smart’ contracts as the beginning of the end of classic contract law. Information & Communications Technology Law, 2017, vol. 26, iss. 2, pp. 116–134. DOI: 10.1080/13600834.2017.1301036.

4. Savelyev A. Some risks of tokenization and blockchainizaition of private law. Computer Law & Security Review, 2018, vol. 34, iss, 4, pp. 863–869. DOI: 10.1016/j.clsr.2018.05.010.

5. Grineva O.V. Application of NFT in the field of intellectual property law, in: Transformatsiya pravovykh institutov: istoriya i sovremennost'. Tendentsii razvitiya chastnogo prava, proceedings of I all-Russian and VII International scientific and practical conferences, Moscow, February 26, 2021, Moscow, Blok-Print Publ., 2021, pp. 233– 234. (In Russ.).

6. Dolganin A.A. Non-fungible tokens (NFT) and intellectual property: The triumph of the proprietary approach? Tsifrovoe pravo = Digital Law Journal, 2021, vol. 2, no. 3, pp. 46–54. DOI: 10.38044/2686-9136-2021-2-3-46-54. (In Russ.).

7. Shomahov A.R. NFT and intellectual property rights: economic and legal aspect, in: Aktual'nye problemy chastnogo prava v Rossiiskoi Federatsii, IV Annual All-Russian Student Scientific and Practical Conference, Simferopol, April 26, 2021, Simferopol, V.I. Vernadsky Crimean Federal University Publ., 2021, pp. 282–286. (In Russ.).

8. Kodaneva S.I. Intellectual property transformation inspired by the developments in Artificial intelligence (Review). Sotsial'nye novatsii i sotsial'nye nauki = Social Novelties and Social Sciences, 2021, no. 2, pp. 132–141. DOI: 10.31249/snsn/2021.02.09. (In Russ.).

9. Sukhanova K.A. Civil law aspect in the regulation of NFT technology. Molodoi uchenyi = Young Scientist, 2022, no. 24 (419), pp. 271–273 (In Russ.).

10. Petkilev P.I. NFT as an object of civil law. Zakonodatel'stvo, 2022, no. 7, pp. 15–21. (In Russ.).

11. Kulakova O.S. Digital art in light of NFT: Market power and legal uncertainty. Digital Law Journal, 2022, vol. 3, no. 2, pp. 36–50. DOI: 10.38044/2686-9136-2022-3-2-36-50.

12. Popova A.V., Semtsiva S.I. To the question about the nessesity of introduction the phenomenon of nonfungible tokens (NFT-token) into Russian legislation. Teoriya gosudarstva i prava = Theory of State and Law, 2021, no. 4 (25), pp. 208–215. DOI: 10.47905/MATGIP.2021.25.4.017.

13. Emelyanov D.S., Emelyanov I.S. Non-fungible tokens (NFT) as an independent object of legal regulation. Imushhestvennye otnosheniya v Rossiiskoi Federatsii, 2021, no. 10 (241), pp. 71–76. DOI: 10.24412/2072-4098-202110-71-76. (In Russ.).

14. Islomov T.R. Legal regulation of NFT in Russia: problems, solutions, prospects. Voprosy rossiiskogo i mezhdunarodnogo prava = Matters of Russian and International Law, 2022, vol. 12, no. 2A, pp. 95–103. DOI: 10.34670/AR.2022.19.18.012. (In Russ.).

15. Mart'yanova G.V., Sokrut E.R. Legal regulation of cryptocurrencies and NFT in the Russian Federation. Agrarnoe i zemel'noe pravo = Agrarian and Land Law, 2022, no. 6 (210), pp. 65–66. DOI: 10.47643/18151329_2022_6_65. (In Russ.).

16. Zagidullin D.R., Pulyavina N.S. Prospects for the development of blockchain technology in the NFT format. Lizing = Leasing, 2021, no. 1, pp. 40–44. DOI: 10.33920/VNE-3-2107-06. (In Russ.).

17. Fomin D.A. Promising directions for the implementation of blockchain technology NFT in to the Russian economy. Ekonomicheskie nauki = Economic Sciences, 2021, no. 199, pp. 7–10. DOI: 10.14451/1.199.7. (In Russ.).

18. Basyuk A.S., Shchukina D.V., Medvedeva I.Yu. NFT technologies as an effective way to develop the country's economy and market goods and services, in: Collection of selected articles based on the materials of scientific conferences of the Humanitarian National Research Institute " Natsrazvitie ", St. Petersburg, March 28-30, 2022, St. Petersburg, Natsrazvitie Publ., 2022, pp. 152–155. DOI: 10.37539/MAR196.2022.66.73.001. (In Russ.).

19. Rogov E. V. Formation of a new type of exchange-traded funds thanks to the technology of non-fungible tokens (NFT). Innovatsii. Nauka. Obrazovanie, 2021, No. 37, pp. 220-225. (In Russ.).

20. Fairfield J. Owned: Property, Privacy, and the New Digital Serfdom. Cambridge, Cambridge University Press, 2017. 250 p. DOI: 10.1017/9781316671467.

21. Fairfield J.A.T. Tokenized: The Law of Non-Fungible Tokens and Unique Digital Property. Indiana Law Journal, 2022, vol. 97, iss. 4, pp. 1261–1313.

22. Garcia-Teruel R., Simón-Moreno H. The digital tokenization of property rights. A comparative perspective. Computer Law & Security Review, 2021, vol. 41, art. 105543. DOI: 10.1016/j.clsr.2021.105543.

23. Bridget Wilson K., Karg A., Ghaderi H. Prospecting non-fungible tokens in the digital economy: Stakeholders and ecosystem, risk and opportunity. Business Horizons, 2021, vol. 65, iss. 5, pp. 657–670. DOI: 10.1016/j.bushor.2021.10.007.

24. Chohan R., Paschen J. What marketers need to know about non-fungible tokens (NFTs). Business Horizons, 2021, vol. 66, iss. 1, pp. 43–50. DOI: 10.1016/j.bushor.2021.12.004.

25. Davydova M.L., Makarov V.O. Smart Technologies in Lawmaking: Towards the Concept of Smart Regulation, in: Popkova E.G., Sergi B.S. (eds.). "Smart Technologies" for Society, State and Economy, ISC 2020, Institute of Scientific Communications Conference, Lecture Notes in Networks and Systems; Vol. 155, Cham, Springer Publ., 2021, pp. 1296–1305. DOI: 10.1007/978-3-030-59126-7_142.