Everything You Need To Know About The Legal Guidance For NFT Marketplace

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Legal Guidance For Nft Marketplace

NFT is also known as Non-fungible Token. Non-fungible tokens are digital assets or the certification of a digital asset. NFTs are ultimately digital collectibles. NFTs are different from other blockchain-based assets like Bitcoin, Ether and stablecoins that are identical and fungible. This is because NFTs represent non-fungible, non-divisible, and non-transferable pieces of ownership in distinct assets

Unlike in Bitcoin, Litecoin, Ether and other Fungible tokens, NFTs cannot be traded directly, it requires a special platform to do so. These special platforms are called NFT Digital marketplaces. These marketplaces are a decentralized platform where buying and selling of NFTs take place.

While many NFTs are issued on the Ethereum blockchain, new NFT focused protocols are being launched independently into many networks that the purchasing and selling of NFTs have improved exponentially and it allows the blockchain to enable peer to peer transaction effectively.

Similar to fiat money or any other purchases that take place physically, selling and buying of NFTs should follow some legal protocols. Even though NFTs eliminate the involvement of third parties, it has to follow some legal guidance for launching an NFT marketplace in order to ensure a smooth transaction for the users.


Some common legal guidance for launching an NFT marketplace are listed below.

  • Company formation:
    In order to launch an NFT marketplace, forming a corporate entity is highly recommended. The formation of a corporate entity provides a strong liability business protection for the entities and shields assets from business obligations. Having a corporate entity will also give the users the ability to seek financial support from external sources and it promotes growth within the corporate. To avail the user of these benefits, the user’s company must be correctly formed and registered.
  • Terms of service:
    The user’s terms of service or terms and conditions are legal documents that provide a legal governing contract between the user and the other users. A perfectly drafted service and terms will protect the business entity from liability. and it will include provisions such as disclaiming any warranties towards users, holding back the company’s overall liability, setting up compensation for losses framework to cover the user’s company, and implementing a strategic problem-solving process in the event of any disputes.
  • Community standards:
    Given the existing dominance of user-generated content and user transactions in NFT marketplaces, it is advisable to implement another layer of legal protection in the form of community standards to govern interactions on the marketplace.
  • Privacy policy:
    Privacy policies are compulsory by law. Legally the corporate entity is required to reveal the data collection and use practices, among other legally permitted disclosures. Generally, privacy policies are intended to implement transparency to users in the working of the collected data. Thus, depending on the privacy law framework applicable to the business, the user needs to make exponential disclosures and provide other choices to the users.


When Set up NFT marketplace, it is important to ensure that the user should appropriately allocate intellectual property rights between the sellers, purchasers and any other parties that are involved in a fair and effective manner. Without an efficient allocation of intellectual property rights in place, the user runs the risk of undermining the legitimacy of the entire marketplace.

Owning an NFT will not grant permission to the user to own the digital asset directly. The ownership of the digital asset is copyright ownership that vests in the creation of the original digital asset.

When a Non-Fungible Token is minted and sold, the purchaser or collector will receive a set of intellectual property rights from the creator.

At the same time, the user’s company is required to utilize the legitimate use of the digital asset and promotional activities, such as digital galleries, promotions and events, potential compilations, and other displays of the original work.

The user would need to ensure the required distribution of intellectual property rights from the creator to the company for any such business requirements.

When considering the appropriate intellectual property rights distribution from the creator to collectors, the company, and the involved parties, it’s essential to set a fair percentage of intellectual property rights.


Content moderation is more likely to become a potential liability for businesses in the near future, Section 230 of the Communications Decency Act provides digital spaces with a degree of legal immunity for user-based content generation platforms.


As collectibles, NFTs represent a unique certificate of ownership over digital assets. Buyers expect to have legal guidance for NFTs. However, there are always in which NFTs can be faked or non-unique.

NFT marketplaces should prohibit any behaviour that would lead to unauthorized commercialization of counterfeiting of underlying works.

As such, NFT platforms should take a proactive role in implementing technical measures to prevent counterfeiting and preserve items authenticity in their marketplace.


There are also other legal guidance for NFT marketplaces, including consumer taxes and protection.

When it comes to consumer protection, many people are insufficiently informed about what they are buying when purchasing an NFT. We may start to see consumer rights law expanded to apply to NFT purchases and digital assets generally.

NFTs, like any other digital asset, are viewed as property by the Internal Revenue Service, or IRS, and people making a market or purchasing and selling them must report sales taxes, profits, and losses.


We at Blockchain App Factory provide the best legal guidance for launching an NFT marketplace. We are globally recognized and have several years of professional experience in providing legal guidance to clients. Our professional legal consulting services team is highly skilled in providing you with the best legal guidance for NFT marketplaces. Our consulting team works 24×7 to assist our customer queries and assist them in business development. The entrepreneurs and investors can avail of our services by contacting us!


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