Last Updated on October 25, 2022
- The U.S Treasury Department has recognised the use cases of NFTs in its crypto-assets report published this month.
- The report appears to be aimed at educating non-crypto natives on the implications of Web3.
- With recent market movements, the U.S. has been closely watching the NFT space over the past year.
The United States Department of the Treasury published a report this month, outlining the implications of crypto-assets for consumers, investors and businesses.
The 58-page report outlines the use cases, risks and implications of crypto assets and NFTs. Aimed at educating non-crypto natives, the report explains the definition of non-fungible tokens and acknowledged the growing role of NFTs in video games and other online entertainment systems as another use case.
The report also mentions that future applications of NFTs include enabling the recording and verification of transfers of real estate ownership; facilitating automatic royalty payments for music and film; preventing duplication and counterfeits in the titling of other property and consumer goods; enabling more digital credentials, including identification, licensing, certification; and facilitating financial industry legal compliance.
However, many of these applications of NFTs are already in use. For instance, blockchain real estate firm Propy is selling homes authenticated by NFTs, while NFT ticketing solutions have been implemented by various Web2 and Web3 platforms to prevent counterfeits. Various entertainment and fan engagement platforms have also been licensing content to use for creating NFTs.
With recent market movements, the U.S. authorities have been closely watching the NFT space over the past year. The U.S. Treasury warned of conduct risks in the crypto asset ecosystem that have resulted in financial harm to consumers, investors and businesses, including scams, theft, hacks and insider trading.
The U.S. Treasury report also states that the NFT market has similar disclosure and integrity gaps. In June, the former head of product at marketplace leader OpenSea was indicted for NFT insider trading.
Consumers can also unknowingly buy NFTs that may contain copyright infringements. “The industry has seen a significant increase in the number of lawsuits filed, with claims related to deceitful marketing tactics or for sales made under false pretenses,” the report mentions.
One such example is the high-profile lawsuit between Hermes and MetaBirkin creator Mason Rothschild, which sparked a wave of brands rushing the file Web3 trademarks. Rothschild’s motion to dismiss the lawsuit was denied in May and Hermes finally filed its own Web3 trademarks on Aug 26.
Despite the implications surrounding crypto-assets, the fact that the governments of the U.S. and other countries such as Singapore, Israel, and Australia, have been watching the NFT space bodes well for its legitimacy and the possibility of a basis for regulation of NFTs in future.
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