Exploratory legal outlooks on the nature of non-fungible tokens from a civil law perspective

Abstract

The emergence of Non-fungible Tokens (NFTs) has brought forth new opportunities as well as new challenges which must be legally tackled. The point of departure is a clarification of all the terminology surrounding them, including Distributed Ledger Technology (DLT), Blockchain technology, crypto-assets, and smart contracts. In addition, after analysing the main definitions of NFTs, various use cases are discussed in order to appreciate the quick rate at which they are developing. Furthermore, the diversity in their use, also merits attention, particularly their use within the Metaverse. The main research questions which this dissertation aims to answer are related solely to Civil Law. Firstly, case law and academic writings are analysed, from which a pattern is deduced, in that cryptocurrencies and bitcoin have, on several occasions, been classified as property, both with respect to Common Law, as well as in Continental Law systems. Moreover, Common Law case law has also pioneered the notion of interpreting NFTs as property of which proves to be a suitable categorisation also in the Maltese law framework. In terms of the underlying assets of the NFT, the researcher distinguishes between NFTs that constitute digital assets in their own right and digital assets which have a real-world asset counterpart. These two categories are analysed, and a discussion ensues regarding where the concepts of possession and ownership stand with respect to NFTs’ sales in the Metaverse. Whilst several questions still need to be answered, the researcher appreciates that the Maltese Civil Code is somewhat able to cater indirectly for NFTs’ sales, in addition with the Electronic Commerce Act. However, it is time that this prestigious code is substantiated with special laws which would enable further flexibility in view of emerging technologies.