NFTs or non-fungible tokens have become a million-dollar industry. Currently, NFT news indicates an increasing demand for an NFT regulatory framework to give consumer protection, legally and online.
Initially launched as a digital art ownership concept, NFTs are now a valuable digital asset worth millions of dollars in the international market. But with this rising popularity, many rugpulls and scams have occurred over the past year due to the lack of regulatory framework. Some countries have completely ignored this requirement while others use traditional asset laws to regulate NFTs.
India ranks highest among many countries with a big NFT market. Many well-known personalities, artists, and celebrities are releasing their NFT collection. However, the government’s regulations don’t seem to take this popularity from a positive perspective.
This year, the Indian government introduced an impending cryptocurrency bill including digital assets and investor protection. Instead of taking advantage of the rising popularity of NFTs, the government implemented a 30% tax on crypto and NFTs, which can discourage people from entering the market at all.
This bill opens a global demand and need for a progressive regulatory framework around the world.
The rising Indian NFT market
India seems to have realized the importance of adapting NFTs in its culture and heritage. Having a rich history with its own traditional art style, Indians found a way to showcase their talent globally through a digital marketplace.
Since last year, NFTs have risen in popularity in India. Due to its low exchange rate and cheap labor, foreign investors also seem to have taken interest in Indian-based projects. The aspect of ownership made it even more attractive because this meant artists can make a living with their artwork by monetizing it on NFT marketplaces and promote NFT collections.
The NFT community is much more closed and collaborative than any other community in the world. Communities work the same way as any membership club. It gathers like-minded people in one place to celebrate the advancements of modern technology, art, and creation.
Lack of NFT regulation
Despite the positive sentiment from the community, NFT is still clumsy on the boat. The lack of regulation regarding ownership, intellectual property, authenticity, and consumer protection prevents many content creators and crypto investors from investing in an NFT project.
The lack of regulations can affect the legitimacy of investors and buyers over an NFT project. It takes a lot of effort or reputation building for NFT creators to gain trust from their investors.
Since NFTs are built on smart contracts; automated programs that run when a pre-condition is met, the issue of legitimacy becomes more complicated than ever.
In an NFT transaction, two factors need a proper framework in terms of legitimacy, first is the lack of laws for cryptocurrencies as a mode of payment, and the second is the foreign exchange issues on cross-border transactions.
Additionally, no legal framework exists in terms of the transfer of ownership of intellectual property. Although smart contracts enable NFT mint it doesn’t legally ensure owners have the right to own it.
So, even if someone copies the NFT, the lack of digital forensics standards on marketplaces and by law doesn’t protect the artist and the person cannot be sued over it.
In other words, there’s no written contract for consumer or creator protection, which leads to the demand for a proper regulatory framework.
How can the NFT regulatory framework benefit the community?
Like physical assets, digital assets also require a proper regulatory framework worldwide. Based on the current market situation, everyone is looking for legislators to step up and propose laws.
Furthermore, there is also a need for a proper marketplace where only verified and authentic projects can mint NFTs and trade. In other words, there needs to be a balance between digital regulation and authority regulation to ensure authenticity and legitimacy.
Many countries like Luxembourg, Dubai, and Japan have been working on legalizing NFTs to make them more accessible while protecting consumers.
For NFT platforms, much work needs to be done when it comes to protecting users’ and creators’ right to ownership and intellectual property with proper forensic software to detect copymints. All in all, marketplaces should be 100% transparent with all transactions.
As the NFT industry continues to grow, it will eventually become an important asset to own in the next 10 years. To keep up with the rising market, the demand for a legal and proper NFT regulatory framework needs to be met.
About Author
Asif Hameed is an overseas Pakistani who has been living in Tokyo, Japan, for 25 years. He marked his recognition in the Japanese market as a prominent businessman and start-up investor and continues to grow his business in IT-related investments, Independent Writer and Blockchain projects worldwide. Knowing the essence of Blockchain and Crypto in today’s technological era, he started NFTStudio24.com, One solution news platform for Blockchain and NFT world.
His Ideology
“In my own life philosophy, I think that your goal in life is to make good things happen for the people in your world, those you love, those in your neighborhood, and those throughout the world,” then you are on the right track. It is my mission to assist you in transforming your ideas into successful realities.
Japan-based Pakistani blockchain company NFTStudio24 is on a mission to educate Pakistanis about Cryptocurrency, NFTs, and Blockchain technology through its platform.
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