Are NFTs Really a Wild West?
Image: Claudie Linke, The Wild West I The End Of An Era (detail), 2020. Courtesy of the artist.
In a recent article written for Right Click Save, Guest Work Agency Director and Founder Alana Kushnir and fellow art lawyer Yayoi Shionoiri, Executive Director to the Estate of Chris Burden and the Studio of Nancy Rubins, explore the regulation of NFTs today.
Where does the “Wild West” label come from?
The blockchain has heralded the dawn of an era characterized by both resistance to third-party control and libertarian “reverence for freedom of choice as the ultimate right.” Decentralization gives agency to users and creators to control how their data is used and monetized — directly connecting supply and demand. Yet, critics of crypto markets and NFTs identify a lack of structure in these systems as both the cause and effect of the Wild West. As art lawyers in this burgeoning ecosystem, Kushnir and Shionoiri think it is important to note that while the foundational principle of Web3 may be individual freedom, existing regulations still apply.
Code is not law, at least not yet
Though legal regulations often adapt to reflect and incorporate the technological environment, and code can contractually set its own unique guidelines in limited circumstances, the pre-existing legal frameworks cannot and should not be ignored. Appropriate guard rails can level the playing field for new creator communities who depend on crypto for their livelihoods. They are also necessary to support a sustainable ecosystem that protects current stakeholders and new users.
Artists can still rely on copyright and consumer protections
Retaining copyright in an artistic work allows the artist not only to adapt their work, but also to realize potential monetary benefits from their creative labor. That copyright — which is a form of “intellectual property” in many jurisdictions — applies to digital art represents a seismic shift in the way stakeholders think about creation, collection, and stewardship of non-physical and non-tangible art. While minting an NFT does not register its underlying copyright, the use of smart contracts and additional applicable terms and conditions may allow artists to share their intellectual property with others.
NFTs must learn to live with the law
In Surfing with Satoshi, Domenico Quaranta notes that because blockchain is here to stay, it is important to “make it the subject of public debate, and to call for structural changes before it is too late.”¹ The same can be said for laws and regulations. Legal evolution may be slow, but it is taking place, with opportunities for reform including in the UK and many other jurisdictions. Like it or not, the NFT space must learn to live within the legal environment.
Read the full article here.