NFTs: A NEW ASSET CLASS?
Singapore lawyers discussed what is truly owned by a buyer of non-fungible tokens at the closing session of TechLaw.Fest 2021.
SINGAPORE, 25 SEPTEMBER 2021 – Non-fungible tokens (NFTs) sales have surged to US$2.5 billion in the first half of 2021, up from just US$13.7 million in the first half of last year. But what are the buyers truly getting for the money they have spent? There are also growing concerns over the rights and protections afforded to NFTs, as well as their associated risks. These issues took centrestage at the closing session of TechLaw.Fest 2021, moderated by SAL member Dr Stanley Lai SC, Partner at Allen & Gledhill and Chairman of the Intellectual Property Office of Singapore’s Board of Directors.
The session also featured: SAL member Mr Benjamin Gaw, Director at Drew & Napier; Mr Chia Hock Lai, Co-Chairman of the Blockchain Association of Singapore; and Professor Dinusha Mendis from Bournemouth University. To illustrate the purchase of NFTs, audience members were treated to a simulated NFT auction organised in partnership with the Blockchain Association of Singapore.
The day’s discussion was framed by Dr Lai, who noted the intellectual property issues that NFTs raised. “NFT exchanges have to be studied carefully, and attendant risks of cryptocurrency exchanges and wallets are still ever-present. The proliferation of copies of works that are transacted by NFTs will also lead to a dilution of value. But NFTs are not a myth, and may even be a plausible reality, provided that the attendant risks are noted and mitigated.”
Panellist Mr Benjamin Gaw, a Director at Drew & Napier, agreed, advising that the public exercise due diligence before purchasing NFTs. “Buyers of an NFT typically have ownership rights over the token, but usually only have a licence to the underlying digital art for personal, non-commercial use, amongst others. This problem is exacerbated as many NFTs do not have clear contractual terms on the exact scope and rights of the NFT owner in relation to the underlying artwork. Purchasers of NFTs must therefore do their due diligence and be fully aware of what rights they are acquiring when purchasing an NFT.”
“Owners of NFTs need to understand their ownership rights as these assets move to the mainstream. Legal professionals also need to be well-versed in the rights and protections afforded by NFTs as well as the risks and mitigation strategies available to better advise their clients. TechLaw.Fest continues to provide a platform for discussion and debate of these cutting-edge legal issues among practitioners, regulators and enthusiasts,” said Mr Rama Tiwari, Chief Executive of the Singapore Academy of Law (“SAL”), which is a co-organiser of TechLaw.Fest.
Beyond NFTs, TechLaw.Fest 2021 also addressed legal technology cybersecurity. Said Mr Bill Deckelman, EVP and General Counsel of Marquee Sponsor DXC Technology, “The rise in frequency of cyberattacks, combined with the acceleration in digitisation of everything, has dramatically changed the risk landscape. An effective eco-system supporting legal tech is the need of the hour. As the Digital Transformation Partner of TechLaw.Fest 2021, we are proud to be a part of the event that has helped to shape meaningful discussions for legal and tech communities - practitioners, academics and students, seeking in-depth learning in technology and legal matters.”
Added SAL member Mr Robson Lee, Partner from Gibson, Dunn & Crutcher LLP, “Legal technology has always been integral to our global operations. It has enabled us to provide seamless services to our clients across our 20 offices in Asia, Europe, the Middle East, South America and the United States. The Covid-19 pandemic has accelerated the pace of our digital transformation. The firm continually invests in the latest technological solutions to enhance our capabilities as an integrated international law firm, so as to effectively serve our clients’ needs and the global community from whichever location, which is the new norm.”
The fourth edition of TechLaw.Fest ran from 22 to 24 September 2021 and attracted more than 4,000 global registrants from 100 jurisdictions. The annual conference is organised by SAL, MP International and Singapore’s Ministry of Law.