Germany’s Federal Financial Supervisory Authority (BaFin) is not ready to classify non-fungible tokens (NFTs) as securities. The agency suggests that NFTs be classified on a case-by-case basis.
On March 8, BaFin magazine published explanatory note on the legal classification of NFTs. At this stage, regulators do not see how NFTs meet the criteria to be considered securities. In the future, however, BaFin may consider NFTs as securities if, for example, 1,000 NFTs contain the same repayment and interest claims.
According to another reservation, if an NFT contains documentation of exploitation or ownership rights, such as a promise to distribute, it can be considered an investment.
The agency recommends a case-by-case approach to classifying an NFT as a “crypto-asset”. But, according to BaFin, the chance of NFTs representing a “crypto asset” is even less than investment classification, given the lack of immediate exchangeability. The lack of standardization also spares NFTs from “electronic money” status.
Given the classification difficulties, BaFin does not expect NFTs to meet the licensing requirements of the Payment Services Supervision Act. And with the exception of fungible instruments that fall under the category of financial instruments, NFTs are also exempt from BaFin’s anti-money laundering supervision. NFTs, considered separately as “crypto-assets”, will have to comply with AML oversight.
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According to metauniverse platform Metajuice, almost three out of four NFT collectors on its platform buy NFTs for status, uniqueness and aesthetics. Only 13% percent of survey participants said they buy NFTs to resell them in the future.
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