NFT (Non-Fungible Token) is a unit of data stored on the blockchain, confirming that a digital asset is unique and therefore not interchangeable. NFTs serve to prove the entity that represents it briefly. The creation of a digital artwork or an intellectual product in the digital environment as an NFT gives it an unalterable and non-replicable digital identity.
NFTs can be created from various artifacts such as photographs, videos, pictures, music. This solid presence of an NFT in the digital world increases the interest in it day by day.
NFTs main elements are smart contract, identifier and metadata. The smart contract, like any other contract, serves the purpose of setting the terms of an agreement, but unlike a traditional paper-written contract, the terms of the smart contract are written in coding through the blockchain.
Because NFTs are an extremely powerful proof tool, they need to be traded securely. In general practice, the sale of an NFT does not constitute to a transfer of the intellectual property rights of the work represented by it and only provides the transfer of the token itself. However, by specifying in the smart contract, all or a part of the intellectual property of the work represented by the NFT can be transferred.
When examining the status of NFTs in Turkish Law, The Law on Intellectual and Artistic Works is where NFTs are regulated. The person who creates the work will be the owner of the work and the material together with the moral rights related to that work.
In Turkish law, the concepts of the product in which the work emerges concretely and the financial and the moral rights of the intellectual property are separated from each other. Pursuant to Article 52 of the Law on Intellectual and Artistic Works states that contracts and transactions regarding the financial rights must be in writing and these rights must be shown separately.
The meaning of the financial rights in this article are the rights to obtain financial benefits from the work, such as processing, reproduction and dissemination. These items can be specified separately in the smart contract; however, it still remains as a matter of debate whether or not the written requirement within the scope of the law will be met with the smart contract.
Transactions such as the trading of NFTs are carried out by and over through networks like Ethereum, which are identified as crypto asset. The description of a crypto asset has been published with the Regulation by the Central Bank of the Republic of Turkey on the 16th of April 2021 as; Crypto assets are created virtually and distributed over digital networks using distributed ledger technology or similar technology. However, this referral is only for intangible assets that do not qualify as flat money, deposit money, electronic money, payment instruments, securities or other capital market instruments. Even though the regulation gives an explanation to what a crypto asset is, it prevents direct or indirect payments with cryptocurrencies in Turkey. In this case, NFT trading with cryptocurrencies constitutes a violation of the law in Turkey.
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