With the Indian Government recently putting a 30% tax on any profit earned through the cryptocurrency market, how far along is it that the fate of NFTs will be sealed the same way? Just like crypto, NFTs use blockchain technology such as Ethereum and smart contacts (Binance Smart Chain), creating unique digital signatures making it very secure.
Currently, a bill is making its rounds in the parliament, called, Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2021. Which seeks to prohibit mining, generating, selling, holding, transferring, disposing of, dealing in, issuing of, or using Cryptocurrency in India. Cryptocurrencies in India have a Trillion-Dollar Market value, but there will be a shift in paradigm given the current scenario of the legislative bodies trying to regulate this newly popularised market.
NFTs, although they operate on similar blockchain technology such as cryptocurrencies, could not be any more dissimilar. NFTs include digital assets and other intellectual property like images, video files, audio files that one could purchase and hold exclusive rights to, while cryptocurrencies are fundamentally used to purchase such exclusive tokens.
Laws Governing NFTs
- The Indian Contract Act, 1872– Just like an auction, the NFT sellers list the assets and an agreement is created enumerating the rights of the buyer/buyers through digital means. Upon the finalization of the sale, the agreement is enforceable as a contract under the provisions of the Indian Contract Act, 1872.
- The Copyright Act, 1957- Just like the creators of any art, the creators of these digital assets are protected under the Copyright Act of 1957. These rights uphold the same moral rights as in any other case, enabling the author of such NFTs, the right to claim authorship of his work; and the right to restrain his work from being distorted, mutilated, modified, or altered and to claim damages for the same distortion, mutilation, modification or alteration.
With the most valued NFT sold at 11.7 Million Dollars, it is clear that NFTs will continue to have a bright future in the capitalist space. However, the solution to regulate the market should lie in innovative regulatory laws and not its perpetual obliteration through banning the market.