NFT Weekly: EU may crack down on NFTs

Despite comments to the contrary, it appears that the EU’s major crypto regulatory framework will cover NFTs after all.

Just because the EU’s various arms, including the European Parliament (EP) and the European Central Bank (ECB), said the agreement it reached to adopt the Markets in Crypto-Assets (MiCA) bill excluded non-fungible tokens does not mean that in practice, it will, suggested a European commissioner at the Korea Blockchain Week conference on August 9, CoinDesk reported this week.

In reality, any NFT that is part of a pool – that is, virtually all of them – will likely have to comply with EU rules designed to provide token buyers with information about the tokens and their risks, said Peter Kerstens.

EU lawmakers “take a very narrow view of what constitutes an NFT,” Kerstens said, CoinDesk reported. “If a token is issued as a collection or as a series – even though the issuer may call it an NFT and even though each individual token in that series may be unique – it is not considered to be an NFT, so the requirements will apply.”

The European Council’s release detailing the MiCA agreement reached on June 30 said that “digital assets representing real objects such as art, music and videos will be excluded from the scope except if they fall under existing categories of crypto-assets.”

It added that a “comprehensive assessment” and, if necessary, a specific bill addressing the NFT market and its risks would be available within 18 months.

What it comes down to, Kerstens said, is a difference of opinion between the national authorities, who saw adding NFTs as pushing far from the heart of a bill designed to protect investors from risky stablecoins and cryptocurrency offerings. However, the European Parliament was more concerned about issues such as price manipulation, CoinDesk said.

Pudgy splashes

By now, you may have heard that NFTs are a way to monetize digital versions of real things like Nike sneakers and McDonald’s cheeseburgers. However, a semi-popular NFT collection, Pudgy Penguins, saw its price rise after its creator announced a line of plush toys based on the flying NFT bird.

Sales on OpenSea, by far the largest NFT marketplace, have increased by 350% since the announcement on August 11th.

On the other hand, it can also be a warning to buy NFTs when news emerges. They are, like most cryptocurrencies, very volatile and tend to come down again.

That’s what happened, according to Nonfungible.com, which reported 14 sales totaling $55,000 on Aug. 9, jumping to 107 sales worth $533,000 on Aug. 11, a level it held for one day before quickly dropping. By August 16, the numbers looked like before the plushers.

Selling stolen NFTs becomes more difficult

Another problem OpenSea has had is the sale of stolen NFTs, which has become a bigger problem as prices rise, prompting hackers and fraudsters to move in.

See more: Seth Green’s kidnapped bored monkey shows NFT’s growing commercialization

Most notably when actor, comedian and TV producer Seth Green had to buy back his own stolen Bored Ape collectible – intended to be the main character in a new TV show, “White Horse” – for $300,000.

Well, OpenSea has had more than a little bad press over this, not least from people who have unknowingly bought a stolen NFT. After taking a culpa for not communicating clearly and in some cases making things too difficult, on August 10 the marketplace issued a Twitter thread who explained the policy, starting with the blindingly obvious: that it is against the law to knowingly support or allow the sale of stolen property.

It went into: “In some cases, the buyer who unwittingly bought a stolen item (through no fault of his own) was inadvertently penalized.”

Which is somewhat inevitable in that cryptocurrency transactions cannot be reversed and the sellers are hidden behind crypto’s pseudonymity – which, when you’re a criminal, is extra hard to break since smart NFT thieves don’t have funds sent to an address that requires knowing yours. – customer information (KYC).

Changes include requiring a police report within seven days to back up any claim that a stolen NFT is for sale, and making it easier to reactivate the sale of an NFT that has been returned to its rightful owner.

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