While some of us are still trying to grasp what the heck non-fungible tokens (NFTs) are, the Singapore High Court has decided they know enough about them that they can be considered property.
Justice Lee Seiu Kin ruled on Friday, Oct. 21 that NFTs meet certain legal requirements to be considered property, such as being distinguishable from other similar assets and having an owner who can be recognized by third parties.
But first, what exactly are NFTs? They are unique tokens that exist on decentralized digital ledgers called blockchains. The term non-fungible itself means unique and hence, NFTs can’t be replaced with something else. On the other hand, cryptocurrencies such as Bitcoin are fungible in the sense that when you trade one Bitcoin for another, what you’ll end up with will be worth exactly the same.
An NFT can represent anything digital, including videos, images, and music, but there is especially big hype around NFTs in the world of digital art, which is what the high court’s ruling pertained to.
Justice Lee made the ruling to justify an injunction he granted to stop any potential sale of an NFT from the wildly popular Bored Ape Yacht Club (BAYC) limited collection.
The sales of BAYC NFTs have totaled over US$1 billion and celebrities such as Justin Bieber, Snoop Dog, Eminem, and Paris Hilton each have their own.
Like its namesake, BAYC NFTs feature portraits of cartoon monkeys with different facial expressions, clothes, colours, jewelery or more.
Singaporean Janesh Rajkumar had sought the injunction with the intention of repossessing his BAYC No. 2162 NFT from an online persona called chefpierre. The dispute is still ongoing.
Justice Lee granted the injunction – a first in Asia, and also globally for a commercial dispute over an NFT. He had also allowed Rajkumar’s request to serve court papers to chefpierre via Twitter, chat platform Discord and through the messaging function of a cryptocurrency platform since the user’s true identity and residence are unknown.
The ruling is seen as a watershed moment for future cases involving NFTs and blockchain technologies. Lee added that the precedent was important since Singapore’s courts could hear more cases related to blockchains, despite their decentralized nature.
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