Non-Fungible Tokens (NFTs) are a type of cryptographic token that uses blockchain technology to represent unique and non-replicable digital assets, such as digital art, videos, music, and other digital content. Each NFT is unique and identified by its own hash code on the blockchain, ensuring its authenticity and traceability. Unlike fungible tokens like cryptocurrencies, NFTs are not interchangeable for other tokens in an equivalent proportion, as each NFT is unique and has its own value.
Due to the recent surge in popularity of these types of crypto assets, Spain and different EU member states have been forced to regulate them to fit within existing legislation.
In Spain, the current regulation partially accommodates NFTs, providing a legal framework for issuers, owners, and investors of NFTs to negotiate, buy, and sell these crypto assets.
Intellectual Property Law:
The Royal Legislative Decree 1/1996, of April 12, regulates intellectual property in Spain, and owners of NFTs, like any artwork owner, enjoy the same rights and obligations set forth in this law. Thanks to the Distributed Ledger Technology (DLT), a smart contract executed on the blockchain can include a clause that establishes the terms and conditions for the use of the work, as well as the intellectual property rights that are retained. In this way, the creator of the NFT can establish that the buyer has the right to own the work, but not to reproduce, distribute or modify it without permission, thus exercising their right to non-reproduction without consent.
Law of Information Society Services and Electronic Commerce:
In Spain, Law 34/2002, of July 11, on Information Society Services and Electronic Commerce, deals with service providers established in Spain and the services provided by them.
Article 23 – Validity and effectiveness of contracts concluded electronically – in its first numeral establishes that: “Contracts concluded electronically will produce all the effects provided for by the legal system when the consent and other requirements necessary for their validity are met.” [1] Due to the absence of specific rules for the application of NFTs, Spanish law places NFT sales within the existing regulation similar to that outlined in the previous article.
Money Laundering Prevention Law:
In order to protect consumers and prevent illicit activities, the EU in its new Markets in Crypto Assets (MiCA) regulation establishes guidelines against money laundering and terrorist financing (AML/CFT). In Spain, Law 10/2010, of April 28, proposes the prevention of money laundering and terrorist financing. Given the nature of DLT, assets traded on the blockchain due to their anonymity can lend themselves to illicit activity. As a result, these general provisions also cover the issuers of such crypto assets in Spain and the EU.
These regulations aim to protect consumers and prevent illicit activities in the NFT market. Pending a new and concrete comprehensive regulation of NFTs, reference should be made by analogy to the regular standards of Spanish law. The new MiCA regulation promises to fill the current legislative gaps so that this technological sector can take advantage of commerce and accelerate the Spanish economy.
