use NFTs in exchanges with consumers, or with anyone acting for purposes unrelated to their commercial, industrial, artisanal, or professional activity, It raises a number of legal questions about the application of European rules On consumer protection and the corresponding national implementing legislation. These issues arise in light of the characteristics of NFTs, which pose different and new problems in relation to the traditional forms of entering into contracts with consumers. The main ones are presented below.
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Identification of the counterparty and anonymity
The first difficulty an NFT provider might face It is to understand the cases in which consumer protection rules actually apply, due to the anonymity that sometimes characterizes blockchain transactions. When no information is available on the counterparty, and it is not known in particular whether the counterparty is participating in the transaction as a trader, the parties may find it difficult to understand whether consumer law applies to the case. In this case, the nature of the counterparties can be deduced from the circumstances in which the transaction takes place. On the basis of the criteria dictated by the Court of Justice in Case C-105/17, for the purposes of applying European consumer law, the professional or otherwise quality of the counterparty can be inferred, among other things, from the number and frequency of transactions executed, the methods of their occurrence and the prices charged. However, it may not always be easy to carry out such an investigation on every transaction, and some degree of uncertainty may remain.
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New EU regulation on markets encrypted assets (Markets in the list of crypto assets, the so-called «MiCA») can provide a partial solution, as it prohibits the anonymity of crypto-asset holders for admission to trading platforms. However, the regulation has not yet entered into force, and from its entry into force, another 18 months will elapse before this rule on anonymity comes into force.
Disclosure obligations to consumers
European consumer law imposes many information obligations on merchants who provide consumers with goods or services. Some of these commitments require you Providing information to consumers Before concluding the contract, in clear and understandable language. Given the complexity and innovative nature of NFTs, special care may be required in meeting these disclosure obligations. In fact, it may not always be easy for the consumer to understand the specific characteristics of NFTs, and therefore it is essential that both the content and the form of the information provided are appropriate. For example, it should be clear what rights the NFT grants, and how ownership in the NFT relates to ownership in the underlying asset. NFTs have created a new concept of ownership, which may not be easy to understand for consumers who are approaching this type of transaction for the first time.
Furthermore, according to Directive 2011/83 / EU on consumer rights, the consumer must be informed of the possibility of exercising the right of withdrawal, as well as the methods to exercise this right. The right of withdrawal gives the consumer the right to withdraw from a remote contract within fourteen days, without the need to provide any justification. In the case of NFTs, the applicability of the right of withdrawal is questionable. In fact, there are some exceptions where this right does not exist, which potentially applies to the sale of NFTs.
Exceptions
The first relates to the situation where the price origin is linked to the fluctuations in the financial market that the trader cannot control and which may occur during the pullback period. This exception may apply to NFTs, given which are traded in a market subject to fluctuations outside the practitioner’s control.
The second is applicable Contracts for the supply of digital content By means of an intangible support if the performance commences, if the contract imposes an obligation on the consumer to pay, if three cumulative conditions are met: 1) the consumer has given his prior express consent to commence the performance within the valid period of withdrawal, 2) the consumer has acknowledged the loss of his right to withdraw, 3) The merchant has provided confirmation of the conclusion of the contract in accordance with the procedures laid down in Directive 2011/83 / EU on Distance Contracts.
In light of the applicability of these exceptions, the right of withdrawal likely does not apply to the supply of NFTs. However, the Court of Justice has not yet had the opportunity to rule on this matter, and doubts may remain.
NFT and Digital Content Policy
The European legislator has adopted specific rules that apply to contracts for the supply of digital content, with Directive (EU) 2019/770. Given that NFTs Produced and supplied in digital formatqualifies as digital content and is within the scope of the Directive.
In the specific context of selling NFTs, Particular attention should be paid to the provisions of the directive That dictates subjective and objective compliance requirements. These requirements dictate that the characteristics of the Digital Content comply, respectively, with the provisions of the Contract and what can reasonably and objectively be expected of the Digital Content. Besides the more obvious hypotheses about NFT non-conformity, such as the case where the content is not available or has been altered, a case that can raise interpretive doubts is one where the NFT does not present the expected characteristics of scarcity. The rarity of an NFT is of fundamental importance to its value, and an NFT with a rarity much lower than what the consumer would expect may not be suitable for the use that the latter intended for it, resulting in non-compliance with the subjective criteria requirements of compliance with the Directive. For example, this can happen if, after the sale, the supplier reduces the scarcity of selling NFTs by putting more NFTs on the market than initially expected. In this regard, it may be appropriate for an NFT sale contract to specify the degree of scarcity to be guaranteed in the future for the separate NFT. If nothing is indicated in the contract, interpretive doubts may arise about the concept of scarcity and the minimum to which NFT maintains the quality of rare digital contents.
conclusion
European rules for consumer protection are designed to conclude contracts in more classic ways and very different from the sale of NFTs in B2C contexts. The innovative nature of NFTs may require new interpretations of current consumer law, or Create new rules Dedicated Apply to NFTs that take into account the peculiarities of the latter. Moreover, the anonymity that characterizes blockchain environments can make it difficult not only to identify the counterparty, but also any subsequent legal actions.
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