Navigating Contractual Relationships in the NFT Market

Participants in the fast-moving – but legally uncertain – non-fungible token (NFT) marketplace can maximize their business opportunities and mitigate risk by delineating their specific role early and clearly defining where their obligations begin and where their responsibilities end. Understanding and defining your role, and the role of your counterparties, is critical. Here are some of the key contractual relationships that NFT market participants can expect to encounter. The artist who creates the underlying media content that is linked to the NFT (NFT Media) legally owns the intellectual property rights to the artwork. Unless the artist conveys these rights in selling the NFT, a buyer does not automatically receive the right to commercially exploit the artwork. The terms of use for the NFT sale will govern what an NFT buyer can and cannot do with the NFT and NFT Media.

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