Big questions about how laws and taxes apply to NFTs and the metaverse

NFTs can now serve as court documents… but they might also be unregistered securities, illegal loot boxes, or come with impossible tax demands. 

Nonfungible tokens (NFTs) are thought of by most people as just funny pictures that degens on the internet spend far too much money on for poorly understood reasons. But Jason Corbett, managing partner of global blockchain law firm Silk Legal, says new and innovative use cases are beginning to emerge.

“We’ve seen recently the courts allowing the serving of court documents by way of an NFT,” Corbett says, referring to a recent decision by a United Kingdom court to allow notice of the case to be served by airdropping court documents as NFTs to wallets allegedly stolen from the claimant.

This changes our conception of what NFTs are and what rights and responsibilities come with them. Following this precedent, the sending of NFTs can be understood as a type of electronic communication, with the caveat that it is generally public. The sending of NFTs is more comparable to attaching posters to the outer wall of one’s house versus discreetly sliding them into the mailbox.

This comparison to publicly visible posters begs the question of whether this means that individuals controlling blockchain wallets hold responsibility for the NFTs they hold, in the same way as a homeowner would ultimately be responsible for removing obscene or otherwise illegal posters on their property, even if placed there against their will. 

Does this mean that, for example, the owners of wallets may in the future be responsible for monitoring them for any type of illegal content sent to them, and act quickly to dispose of them in some manner? That’s just scratching the surface.

Metaverse Law MA thesis “ENCODED TERRITORY: The Blockchain-based Metaverse as a Special Environment of International Law” argues that the #Metaverse influences the balance of global power & demands special legal treatment @UniTurkuLaw @UniTurku#NFTs #BlockchainGaming #cryptolaw pic.twitter.com/GSvghv6Xoy

— Elias Ahonen.eth (@eahonen) June 11, 2022

“The blockchain Metaverse presents challenges to the international order due to the limited ability of states generally to intervene in metaverse-based actions,” I wrote in my Master’s in International & Comparative Law thesis, “The Blockchain-based Metaverse as a Special Environment of International…