Germany’s BaFin is not yet ready to classify non-fungible tokens (NFTs) as securities. The agency recommends classifying NFTs on a case-by-case basis.
On March 8, the BaFin Journal published an explanatory note considering the legal classification of NFTs. At this point, regulators cannot see how NFTs meet the criteria to be considered securities. However, in the future, BaFin may treat NFTs as securities if 1,000 NFTs contain the same repayment and interest requirements.
According to another reservation, NFTs can be considered investments if they contain documentation of development rights or ownership, such as a promise to distribute. The agency recommends a case-by-case approach to classifying NFTs as “crypto-assets.” However, according to BaFin, due to the lack of instant convertibility, NFT is even less likely to represent a "crypto asset" than an investment classification. The lack of standardization also makes NFT lose the status of "electronic currency".
Given the difficulty of classification, BaFin does not expect NFTs to comply with the licensing requirements of the Payment Services Regulation Act. Moreover, NFTs are not subject to BaFin’s anti-money laundering supervision, except for fungible alternatives that fall under the category of financial instruments. NFTs, which are individually considered “crypto assets,” are subject to anti-money laundering regulations.
According to data from the Metaverse platform Metajuice, nearly three-quarters of NFT collectors on its platform buy NFTs for status, uniqueness, and beauty. Only 13% of survey participants said they bought NFTs to resell in the future.
