Compliance Guide for NFT Digital Collectibles Business: See if your business is punished

Source: Mankiw Blockchain Law

01 What types of digital collections are currently on the market?

Today’s digital collection market has long passed the period of contention among a hundred schools of thought. Now it is at least an era when thousands or even hundreds of thousands of flowers are blooming. Through a simple combing, we summarize the main types of digital collections currently on the market. There are the following types of digital collection products:

(1) Digital artwork

Artists convert creations into digital forms and use NFT for unique identification. Realize the ownership confirmation and transaction of digital artworks.

(2) Music and film and television works

Artists, musicians, and producers can digitize audio and video works through NFT and sell them in the market sell.

(3) Virtual entities

For example, virtual sports cars, virtual real estate, etc. use NFT to represent virtual vehicles, virtual spaces or digital parcels, allowing users to purchase, Own and trade corresponding virtual products.

(4) Game items

Virtual items obtained in the game can be mapped to NFT, so that players can actually own and use them in different games .

In addition to the above four categories, the number of collections in the market is dazzling and dazzling, but they remain true to their origins, and the underlying logic of all types of products is the same.

02 NFT digital collection compliance requirements

In terms of qualification requirements, the main It involves two steps: producing (casting) digital products and issuing digital collections. During this process, all parties (mainly platform parties) need to follow corresponding qualification requirements to ensure legal compliance in future business operations.

(1) Platform party

• Legal and valid business license;

• ICP filing and licensing of platform websites;

• Public security network security filing;

• < p>EDI license (Category B21 value-added telecommunications business, required when the platform allows third-party merchants to enter to provide buyers with transaction services for digital collections);

• Block Chain information service registration;

• Art business unit registration;

• Internet culture business license;

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• Auction operation approval certificate.

It would be great if all the above qualifications or registrations could be obtained. However, in practice, very few people can obtain all the above qualifications or registrations, which also leaves a hidden problem. avoid future legal risks.

(2)IPLegal and valid

The issuer or the IP parties cooperating with the platform are It is necessary to have real intellectual property rights for the digital collections issued. Even if the platform uses AI-generated images for casting, attention should be paid to the AI ​​platform’s rights statement for the intellectual property rights generated by the images. Currently, most platforms do not authorize or transfer any intellectual property rights to users.

(3) Real chaining

Domestic digital collections mainly use alliance chains, and the platform must Review matters such as whether the service agency has qualifications and whether the handling fees are reasonable. According to several criminal cases involving Shuzang platforms represented by Lawyer Liu, one obvious feature is that some platforms falsely uploaded to the chain or did not upload to the chain at all, or sold digital products that were not uploaded to the chain at the time and did not comply with the marketing content.

03 Common legal risks of digital collection platforms

In fact, the above cooperation Legal risks are already included in the regulatory requirements. For example, failure to meet relevant qualifications, problems with IP, and lack of real chaining are all common legal risks. Lawyer Liu has previously written an article about the criminal legal risks in the digital collection industry (What are the crimes if the NFT digital collection platform is involved in criminal proceedings?). This article will briefly list some common criminal, civil, and administrative legal risks. For entrepreneurs, understanding these potential risks and taking corresponding compliance measures is crucial to the steady development of the platform.

(1) Criminal legal risks

In addition to the criminal legal risks mentioned in Liu Lu’s previous article, another thing that needs attention is intellectual property rights Crimes of infringement, such as copyright infringement. It is also very simple to avoid it: ensure that your own or cooperative IP is authentic, legal, and valid, and do not use other people’s pictures, videos, audios, etc. without authorization; in addition, for digital collections with securities attributes or using the digital collection platform to conduct illegal activities for others, Paying settlement assistance may constitute an illegal business crime.

(2) Civil legal risks

At present, many Tibetan platforms are more or less involved in civil litigation, usually as defendants. The main reason is that the platform involves false propaganda, unfulfilled guarantee promises, etc. Lawyer Liu has even seen a data storage platform being sued for not paying the company's rent, and being arbitrated for arrears of employee wages.

Another civil risk is intellectual property infringement disputes, such as using other people’s pictures, audio and video, etc. without their permission. What Lawyer Liu needs to remind everyone here is that when civil legal risks accumulate to a certain level, they can easily "evolve" into criminal risks. For example, when there are a large number of rat warehouses on the platform, self-buying and self-selling, guaranteed profits, additional issuance, etc. Finally, it is easy to trigger the crimes of fraud and illegal fund-raising in criminal laws.

(3) Administrative legal risks

The so-called administrative legal risks mainly refer to administrative penalties imposed by relevant administrative departments due to the non-compliant operation of the platform. Punishments, such as confiscation of illegal gains, fines, revocation of business licenses, etc. The most important risk for the Shuzang platform is that it fails to obtain all or part of the operational qualifications mentioned above; secondly, there is the possibility of being punished for violating the Consumer Rights Protection Act due to false propaganda; finally, Shuzang entrepreneurs also need to pay attention to relevant Administrative and legal risks in tax compliance, data compliance (especially involving data export), etc.

04 Mankiw’s lawyer suggested that

Some friends will think that lawyers are based on their own Path dependence in professional thinking always tells entrepreneurs that doing this is risky and that it is against the law. But starting a business is about finding a bright future in uncertainty. If you listen to lawyers, it is best to just lie down. . Of course this is not the case. One of the simplest reasons is that in reality so many legal risks always exist objectively and will not disappear just because lawyers raise them or don’t raise them. Lawyer Liu has done a lot of work in the blockchain or currency circles. In criminal cases, when you violate criminal law, the police will not let you go just because you do not understand the law or the criminal legal risks. Therefore, lawyers must tell entrepreneurs what big pitfalls and small pitfalls there are in the road ahead. , how to better avoid it. As for the effectiveness, it often depends on the lawyer's understanding, control and explanation of legal or regulatory policies, and how much the entrepreneur can listen. However, a good lawyer certainly does not tell clients what you cannot do, but how to do it better, and how to reach the destination to the maximum extent possible within the legal and regulatory framework without overstepping the bounds.

So much verbosity, let’s return to the topic of this section: How does the Shuzang platform comply with regulations? In a simple sentence, it is necessary to meet the compliance requirements mentioned in the article while not touching legal and regulatory red lines. Of course, if you have a reliable lawyer to accompany you on your entrepreneurial journey, wouldn't it be a safe and "romantic" choice?