NFTs may be classified as securities under new EU legislation

According to recent reports, a new regulatory EU bill wants to classify NFTs as securities.

The MiCA (markets in crypto-assets) draft legislation bill was first introduced by an EU advisor, Peter Kerstens, during Seoul Blockchain Week in August 2022.

According to the law, EU residents who want to sell their NFT collections online will come under the category of crypto asset service providers and would need to obtain legal authorisation before proceeding with the sale.

EU law intends to regulate NFTs as securities

The MiCA legislation, which is expected to be completed soon, includes a new set of policies for the developing NFT industry.

Per the finalised legislation draft acquired by Decrypt, NFTs sold independently as part of a larger NFT collection will possess 'little to no' distinctive qualities/utility per the new law, and will fall under the same regulatory scrutiny as cryptocurrencies.

The new law will also require crypto asset issuers to publish detailed whitepapers outlining their future roadmap, among other things.

The bill was discussed and negotiated under the leadership of the European Parliament, the European Commission, and the European Council and is slated to come into effect from 2024 onwards.

The legal terminology used in the legislation could be applied to popular NFT collections such as Bored Ape Yacht Club and Cryptopunks, which are made up of thousands of distinctive NFTs that users can buy individually to enjoy additional perks.

The draft has stirred the NFT industry, with opinions pouring in on how the new law could pave the way for the industry to attain success in the long run. The legislation is regarded as one of the most significant pieces of legislation ever enacted.