NFTs and Fractional NFTs: Legal and Regulatory Concerns for Creators and Investors

NFT as a Commodity, Securities Requirements, AML and Cybersecurity Issues

Recording of a 90-minute premium CLE video webinar with Q&A

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Conducted on Wednesday, August 25, 2021

Recorded event now available

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Course Materials

This CLE course will examine the current legal and regulatory framework around creating and marketing non-fungible tokens (NFTs). The panel will discuss regulation of NFTs as a commodity, potential securities requirements when fractional NFT interests are offered, and money-laundering and cybersecurity issues with the blockchain architecture in which NFTs are held and traded.


NFTs have emerged as a viable asset class in 2021. Like cryptocurrency, NFTs reside on the blockchain, but in contrast to cryptocurrency, they are unique and can represent a hard asset such as title to property or digital assets such as video images and tweets. As the market for NFTs and fractional NFTs evolves, counsel to NFT creators and the platforms should consider various legal and regulatory issues.

An NFT may be deemed a commodity, subject to general prohibitions on deceptive and manipulative trading under the Commodity Exchange Act. If offered on a leveraged basis, additional regulations could apply.

Investors may look to purchase fractional interests of an NFT, but such interests could be considered "investment contracts" subject to registration requirements of the Securities Act of 1933, and the sellers of fractional interests may be treated as broker-dealers under the Securities Exchange Act of 1934.

Activities related to the transfer, sale, and custody of NFTs may be subject to Bank Secrecy Act and FinCEN regulations. In addition, OFAC has pursued enforcement actions involving cryptocurrency transactions and blockchain technology--NFTs present a similar avenue of risk exposure.

Intellectual property laws, and in particular copyright and trademark laws, potentially limit the sale and transfer of NFTs and require consideration in any NFT transaction. Although some IP laws allow for the allocation of fractional ownership shares and fractional rights, contractual terms should specifically address any fractional shares.

Listen as our authoritative panel discusses the regulatory issues and legal risks associated with the marketing and sale of NFTs and fractional NFTs.



  1. Introduction to NFTs: how they are created, how they are identified, and where they reside on a blockchain
  2. NFT as a commodity
  3. Securities issues with fractional NFTs
    1. Howey test: registration/exemption requirements
    2. Sellers of fractional NFTs treated as broker-dealers
  4. IP considerations
  5. Bank Secrecy Act and AML concerns
  6. Cybersecurity issues with NFTs
  7. Consumer protection issues


The panel will review these and other important issues:

  • What commodities regulations might apply to the sale of an NFT?
  • When might securities registration and broker-dealer regulations be applied to fractional NFTs?
  • How can NFT sellers ensure that the sale and transfer of an NFT do not violate Bank Secrecy Act and FinCEN regulations?
  • What cybersecurity issues associated with the blockchain are of special concern with NFTs?
  • What intellectual property rights are necessary for the issuance or subsequent sale or transfer of NFTs? What limitations do copyright and trademark laws place on issuance or sale of NFTs, including the sale of fractional shares? What are the risks of failing to comply with applicable intellectual property laws?


Lom, Andrew
Andrew James Lom

Partner, Global Head of Private Wealth
Norton Rose Fulbright US

Mr. Lom is Co-Head of the firm’s Asset and Wealth Management International Business Group--U.S. and a member of...  |  Read More

Nolan, Anthony
Anthony R.G. Nolan

K&L Gates

Mr. Nolan has a domestic and international practice that emphasizes lending transactions, fixed income securities,...  |  Read More

Wittow, Mark
Mark H. Wittow

K&L Gates

Mr. Wittow’s work focuses on complex intellectual property, technology and data related transactions and...  |  Read More

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