The expert criticized the bill on NFT tokens

An attempt to equate NFTs with protected results of intellectual activity and means of individualization makes it clear that lawmakers do not understand the nature of NFTs, says Mikhail Bystrov, partner, head of the FinTech & Crypto practice at DRC law firm.

The lawyer commented on the bill, which was submitted to the State Duma on May 19. Deputies of the New People faction believe that the document will protect the rights of NFT owners, since now in the legal field in Russia this concept does not exist at all, and people continue to make transactions with non-fungible tokens "at their own peril and risk."

NFT is proposed to be described as “a non-fungible token of a unique digital asset (images, videos or other digital content or asset) in the form of non-fungible data stored in a distributed registry system (blockchain system)”. Such tokens are proposed to be regulated as intellectual property.

“By their nature, NFTs are a unique digital quasi-evidence confirming the granting of rights to any asset, and not necessarily digital. However, lawmakers limit the scope of NFTs only to digital assets, although they are not defined anywhere in the current legislation, and in reality, the potential scope of NFTs is far from being limited to them,” Bystrov emphasized.

He added that NFT could be successfully used to confirm the ownership of some real-world object, such as a car or an apartment. However, legislators do not think about this, since the token itself is equal to an attached picture or video for them, the expert believes.

According to him, the authors of the bill do not understand that by purchasing NFT, users do not necessarily receive the exclusive right to a digital object tied to the token. In the vast majority of cases, users just purchase a "digital candy wrapper" that provides them with extremely limited rights to use the linked object, and the object itself can be stored basically anywhere - IPFS, a dedicated server, in the cloud.

The expert pointed out that good definitions of NFT already exist in international experience. In particular, last year, the Thai SEC defined NFTs as “digitally issued tokens to secure ownership or rights to an object or certain rights that are unique and can be issued on the blockchain that cannot be exchanged for the same amount of the same category or type of cryptographic asset”.

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