Overview
Non-fungible tokens (NFTs) are digital tokens and cryptoassets associated with the blockchain, acting as a digital certificate of authenticity. All kinds of digital objects can be bought and sold as NFTs, including images, music, videos, books, virtual land and even tweets.
The NFT is proof of authenticity on the blockchain, commonly the Ethereum blockchain, which stores information such as proof of ownership, when it was purchased and when it was sold and to whom it was sold. These records cannot be forged because the record of information is maintained by thousands of computers and nodes around the world on a public ledger.
NFTs have changed the digital asset market. Ownership of the NFT can be proved and guaranteed by the blockchain, providing transparency that is an important part of their appeal.
Demand, collectability and smart contracts that can provide royalties to creators have driven rapid growth. But NFTs are not risk free and require careful consideration.
Risks and Fraud
At present, NFTs are not subject to regulation, which means there is little or no legal protection for those who create, invest or trade in them. Fake sellers, fake platforms, phishing and sleepminting all pose risks.
There is also the danger of price bubbles, bit rot or format rot and the use of NFTs for money laundering or to evade economic sanctions.
Types of NFT fraud include tokenisation of others work, wash trading to manipulate value, insider trading, sleepminting to divert assets and using NFTs to launder money.
Legal Standing and Issues
Key legal considerations include data hosting and storage of NFTs, royalties, data protection, intellectual property rights, transacting NFT sales and taxation. Lack of clear regulation means these areas can be uncertain.
The Financial Action Task Force has explained when regulators should identify and regulate NFTs as virtual assets. An approach rooted in the actual use of NFTs will be required, with compliance and monitoring obligations to be met where they meet the functional definition of a virtual asset.
Compliance and the Right Approach
NFTs are at the intersection of finance and technology and pose compliance risks. Managing those risks requires identifying, assessing and mitigating their effects with a risk-based approach, real-time alerts and measures to reduce illicit activity without compromising user experience.
About Rashid Imran Attorney - NFT Lawyers
Rashid Imran Attorney is a law firm that has been at the forefront of many of the most significant cryptoassets cases that have come to court. The judgements in these cases have shaped the legal landscape for such assets.
Our specialist experts in this area are ideally placed to offer advice and devise a course of action for any individual or corporate that is involved with NFTs or is considering becoming involved.
Awards & Honours
“A leading fraud and corporate defence firm. Commended for financial crime and fraud and regulatory.”
The Times Best Law Firms 2026
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