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NFTs and Copyright: Challenges and Opportunities

Blockchain technology and its applications, such as smart contracts and cryptocurrencies, are in the headlines each day with new uses or products for various sectors. Since March 2021, non-fungible tokens (NFTs) have gained popularity and the sales volume of NFTs has grown tremendously. Time will show if this is a financial bubble that is meant to burst, but it sure has some legal implications. NFTs, being tokens functioning on the blockchain, raise some questions with regard to securities law, property law and contract law. The most highly debated questions are in the area of copyright law. In this article, the problems arising from the creation and sales of NFTs are tackled in light of copyright law, mostly with a focus on the legal qualification of minting and selling, ownership and the consequences of purchasing an NFT. The qualification of minting and selling is uncertain due to the fact that underlying work itself is not stored in the NFT. It will be hard to prevent the creation of unauthorized NFTs if it is concluded that the process of minting and selling is not included within the exclusive rights of copyright. Furthermore, the smart contracts enable creators of an NFT to receive payment for resale of the NFTs without meeting the conditions of a resale right regulated under copyright laws. Although this is not a resale right literally, digital artists reach the same outcome as the use of resale right via NFTs.