As the UK court recognises NFT’s as property, not all experts have hailed the development as groundbreaking. But it will certainly help the industry fight fraud.
The British Web3 community celebrated an important legal precedent recently at the High Courts of Justice in London, the closest analog to the United States Supreme Court. The United Kingdom court has recognised non-fungible tokens as private property.. However, there is a caveat: In the court’s ruling this private property status does not extend to the content it represents.
Theft of NFT’s
Two NFT’s from the Boss Beauties collection created by “Gen Z change-makers” and displayed at the New York Stock Exchange were stolen in February 2022.
The tokens entitle holders to a number of benefits, including access to exclusive events. After being stolen from a MetaMask wallet, the pieces were traded on OpenSea. Using Mitmark’s security and intelligence expertise, the owner tracked down the NFTs.
On April 29 the United Kingdom’s High Court acknowledged NFTs as legal property, after the matter was brought to court in March. Additionally, the court ordered Ozone Networks (OpenSea’s hosting company) to freeze the assets on its accounts and to provide information about the two account holders who owned the stolen NFTs. After that, OpenSea halted the sale of NFTs 680 and 691.
“Women in Blockchain Talks was founded to open up the opportunities blockchain offers to anyone, regardless of age, gender, nationality or background. This case will hopefully be instrumental in making the blockchain space a safer one, encouraging more people to interact with exciting and meaningful assets like NFTs.”Lavinia D. Osbourne, founder of Women in Blockchain and original owner of the two NFT’s, victoriously proclaimed following the court order.
The token vs underlying asset
Counsel on the case, Rachel Muldoon, highlighted the “utmost significance” of the court’s decision, which, she said, “removes any uncertainty that NFTs are properties unto themselves, distinct from the thing they represent, under English law.”
As NFTs already enjoy property status under the Internal Revenue Service in the United States, the proclaimed difference between the token and the underlying asset is unlikely to fill the gap left by current legislation in the United Kingdom.
Emily Gould, assistant director of the Institute of Art and Law, noted in her opinion piece on the case that UK judicial decisions, regulatory developments, and government studies over the past few years have increasingly congruently categorised crypto assets as property. She specifically pointed to 2019’s AA v. Persons Unknown and the “Legal statement on cryptoassets and smart contracts” report, presented by the UK Jurisdiction Taskforce of the LawTech Delivery Panel in the same year.