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Financial Regulation

Currently, NFTs are not yet specifically regulated in most countries. However, regulators may determine that NFTs exhibit characteristics similar to regulated investment units in the future. NFTs may become subject to some international and national laws if this occurs. As one can imagine, this would bring about additional obligations concerning the sale or custody of NFTs.
One consequence of categorizing NFTs as investment assets may be increased KYC and AML requirements. NFT marketplaces and other businesses involved with NFTs may be obligated to put in place know-your-client identification processes. These businesses would also be required to comply with other requirements under anti-money-laundering regulations. National regulators generally coordinate these legal obligations. Given the cross-border nature of the NFT market, compliance may become challenging.
Another aspect that could be affected by the categorization of NFTs as investments is any marketing activity. Recently, regulators have taken measures to crack down on crypto-related promotions and advertisements. These measures are a way of protecting customers in a volatile market. These regulations have primarily come in the form of generally restricting crypto advertisements, mandating disclosures, or simply subjecting them to the same rules that govern traditional financial products. If NFTs become categorized as investment assets, they will likely be subjected to similar regulations.

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