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Meta pulling the plug on NFTs across Instagram and Facebook

The short-lived NFT features were first launched in May 2022, but Meta's financial technology lead said it's "winding down" the tools to focus elsewhere.

Big Tech firm Meta is scrapping its nonfungible token (NFT) feature across its social media platforms Facebook and Instagram just under a year after it launched.

Stephane Kasriel, Meta's head of commerce and financial technologies, tweeted the news on Mar. 13, saying Meta is "winding down" its NFT support as it wishes to "focus on other ways to support creators, people, and businesses."

Kasriel added the firm is still prioritizing ways for users to "connect with their fans and monetize" and will focus on such as building payment rails on its platform and through its messaging apps and monetizing Reels — the company's short form video tool.

The product was relatively short-lived as testing began in May 2022 with select United States-based creators on Instagram before it expanded to Facebook that June. It expanded again in July as Instagram made NFT tools available to over 100 countries.

This is a developing story, and further information will be added as it becomes available.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Chinese court says NFTs are virtual property protected by law

The court said NFTs are “unique digital assets” that “belong to the category of virtual property” in a case where it had to confirm the legal attributes of NFTs.

A Chinese court in the city of Hangzhou has said nonfungible token (NFT) collections are online virtual property that should be protected under Chinese law. 

A Nov. 29 article posted by the Hangzhou Internet Court — a specialist internet court — shared by crypto blogger Wu Blockchain on Dec. 5 reveals the favorable language for NFTs after the country began to crack down on cryptocurrencies in 2021, leaving NFTs in a legal grey area.

Translated, the article says NFTs “have the object characteristics of property rights such as value, scarcity, controllability, and tradability” and “belong to network virtual property” that “should be protected by the laws of our country.”

The court decided it necessary to “confirm the legal attributes of the NFT digital collection” for a case, and admitted “Chinese laws currently do not clearly stipulate” the “legal attributes of NFT digital collections.”

The decree by the court was brought forward in a case where the user of a technology platform, both unnamed, sued the company for refusing to complete a sale and canceling their purchase of an NFT from a “flash sale” because the user provided a name and phone number that allegedly didn’t match their information.

“NFTs condense the creator's original expression of art and have the value of related intellectual property rights,” the court said. It added NFTs are “unique digital assets formed on the blockchain based on the trust and consensus mechanism between blockchain nodes.”

Due to this reason, the court said “NFT digital collections belong to the category of virtual property” and the transaction in the legal case is seen as the “selling of digital goods through [the] internet” which would be treated as an e-commerce business and “regulated by the ‘E-commerce Law’”.

It comes after the Shanghai High People’s Court issued a document in May that stated Bitcoin (BTC) is similarly subject to property rights laws and regulations despite the country’s ban on crypto.

Related: Could Hong Kong really become China’s proxy in crypto?

With its crypto ban, China has worked to separate NFTs from crypto with a government-backed blockchain project to support the deployment of non-crypto NFTs paid for with fiat money.

The government is still vigilant to ensure its population resists “NFT speculation” as described in an April joint statement between the China Banking Association, the China Internet Finance Association and the Securities Association of China that warned the public about the “hidden risks” of investing in NFTs.

China isn’t the only jurisdiction to place NFTs under property laws. A Singaporean High Court judge drew on existing property laws in an October case likening NFTs to physical property such as luxury watches or fine wine saying “NFTs have emerged as a highly sought-after collectors’ item.”

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Nifty News: China’s lockdown protest NFTs emerge, Candy Digital cuts staff, and more

Two collections have appeared on NFT marketplace OpenSea depicting images and art related to the rare widespread protests in China over its lockdown policies.

China’s COVID-19 protests cemented as NFTs

Nonfungible tokens (NFTs) depicting the ongoing protests in China against the country’s tough zero-tolerance COVID-19 policy have found their way to the NFT marketplace OpenSea.

At least two collections have been created in November, the first is a Polygon (MATIC)-based collection called “Silent Speech” featuring 135 NFTs depicting images of protesters, signage, graffiti and even social media screenshots related to the ongoing protests up for auction starting at 0.01 Ether (ETH), or just under $11.50.

A Silent Speech NFT titled “Beihang University” (translated) shows an image of multiple tealight candles within surgical masks. Candles are an often used symbol of remembrance.

Another collection titled “Blank Paper Movement” of 36 Ethereum-based NFTs with a floor price of 10 ETH, or nearly $11,800, features a more artistic take as the images of the protests appears to be painted.

Holding a blank sheet of paper has emerged as a symbol representing the suppression of speech in the rare and widespread protests which have flared up across China since Nov. 14, starting with residents of Guangzhou, one of China’s biggest cities, tearing down police barricades in response to COVID-19 related measures.

The protests intensified on Nov. 24 as a fire that day in a high-rise building in the northeastern city of Urumqi killed 10 people.

Some Chinese internet users believe residents weren’t able to escape due to extreme lockdown measures which have included authorities wiring or welding doors shut.

Candy Digital lays off 100 staff 

NFT company Candy Digital has reportedly laid off a sizeable portion of its workforce amid turbulent crypto market conditions and a massive dip in NFT trading volumes this year.

More than one-third of the company’s roughly 100 employees were cut according to a Nov. 28 report from the sports industry outlet Sportico.

It’s unclear the reason for the layoffs and if any particular departments were affected as Candy Digital has not publicly addressed the layoffs. The former community content manager at Candy Digital, Matthew Muntner, in a Nov. 28 Twitter post publicly confirmed he was part of the staff cuts:

Cointelegraph contacted Candy Digital for comment but did not receive an immediate response.

Candy Digital was launched in June 2021, backed by sports e-commerce store Fanatics, crypto-friendly entrepreneur Gary Vaynerchuk and Galaxy Digital CEO Mike Novogratz.

The company quickly gained partnerships with sports leagues including Major League Baseball, NASCAR’s collaborative Race Team Alliance, and several college athletes. It was valued at $1.5 billion in Oct. 2021 following a $100 million funding round.

Candy Digital’s layoffs follow others across technology firms such as NFT protocol Metaplex’s Nov. 17 cuts of “several members” of its team, Meta’s Nov. 9 layoff of 11,000 employees, and Flow blockchain developer Dapper Labs’ Nov. 2 layoffs of roughly 130 employees.

Bored & Hungry restaurant runs pop-up at Phillippine blockchain week

The Long Beach-based NFT-themed burger restaurant Bored & Hungry has set up a pop-up shop at the Philippine Blockchain Week which kicked off on Nov. 28 local time.

It’s the first time the restaurant has operated in South East Asia, the brand also operated a pop-up french fry stand at NFT.London in early November.

The restaurant first opened in April and is themed using the owner's intellectual property of his owned Bored Ape Yacht Club and Mutant Ape Yacht club NFTs and accepted ETH and ApeCoin (APE) as payment.

Around two months after its opening, in June, the store inexplicably stopped accepting cryptocurrency as a form of payment, likely due to the drop in crypto prices.

Ripple’s XRP Ledger hits new record NFT sale

Ripple’s XRP Ledger blockchain has recorded a new record NFT sale, with an XPUNK NFT — a clone of the popular Ethereum-native CryptoPunk NFTs — selling for 108,900 XRP (XRP), about $44,000 at the time of sale on Nov. 25.

The sale was a result of an open auction with over 20 people in a Discord voice chat according to the XPUNKS official Twitter account. It refused to disclose the purchaser but said “the community knows who it is.”

Related: The metaverse is a new frontier for earning passive income

The XRP Ledger introduced NFTs on Oct. 31 with the introduction of the XLS-20 standard that was first proposed on May 25, 2021, the NFTs feature “automatic royalties” for creators.

More Nifty News

The community-led decentralized autonomous organization (DAO) made up of ApeCoin holders launched its own NFT marketplace on Nov. 24 featuring only Yuga Labs-backed collections.

Following the surprise win of the Saudi Arabian soccer team at the FIFA World Cup over Argentina on Nov. 22, the floor price of a Saudi Arabian-themed NFT collection unrelated to the team jumped by 52.6% with some appearing to view the tokens as an indirect way to bet on the success of soccer teams.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

MATIC price eyes 200% gains on Polygon adoption by Instagram, JPMorgan

Polygon’s list of high-profile partners is getting longer, with Disney, Starbucks and Robinhood already boarding its blockchain.

Polygon (MATIC) emerged as the best-performing asset among the top-ranking cryptocurrencies on Nov. 3 as the market’s attention turned to the latest Instagram and JPMorgan announcements.

Polygon in high-profile partnerships

Notably, Meta, the parent company of Instagram, named Polygon as its initial partner for its upcoming nonfungible token (NFT) tools that allow users to mint, showcase and sell their digital collectibles on and off the social media platform.

Meanwhile, banking giant JPMorgan used Polygon to conduct its first live trade (worth about $71,000) on a public blockchain, marking a concrete step toward integrating cryptocurrencies into traditional financial frameworks. 

MATIC, a utility and staking token within the Polygon blockchain ecosystem, rose over 13% to $0.985 after the announcements, accompanied by an uptick in daily trading volume.

MATIC/USD daily price chart. Source: TradingView

MATIC’s upside move came as a part of a broader recovery rally across the crypto sector that started in mid-June. MATIC’s price has rebounded by more than 200%, a trend that will likely sustain in the coming months.

MATIC’s price nears cup-and-handle breakout

The first cue for MATIC’s bullish continuation comes from a classic technical setup.

On the daily chart, MATIC has painted a cup-and-handle setup, which comprises a U-shaped recovery followed by a downward drifting channel. The token is now eyeing a decisive breakout above the pattern’s neckline range (the red bar in the chart below) to reach $2.89, its primary upside target.

MATIC/USD daily price chart featuring cup-and-handle pattern. Source: TradingView

As a rule of technical analysis, a cup-and-handle pattern’s target is measured after adding the distance between the cup’s bottom and neckline to the potential breakout point. As a result, MATIC is now eyeing a 200% price rally by the end of Q1 2023.

Fundamentally, MATIC’s demand could keep growing, given Polygon’s growing NFT projects launched by mainstream companies.

Related: Warren Buffett-backed neobank picks Polygon for Web3 token — MATIC price eyes 100% rally

For instance, Polygon’s list of prominent NFT partners includes names such as Disney, Robinhood and Starbucks. Furthermore, Polygon had a strong Q3, wherein its number of active wallets reached a record high of 6 million, primarily driven by the launch of Reddit’s NFT marketplace on its blockchain.

Polygon NFTs had the strongest Q3 performance in 2022. Source: Messari

On the other hand, macro risks continue to threaten the ongoing crypto market recovery, which may hurt Polygon despite its growing partnerships with big-name brands. That being said, a strong pullback from the cup-and-handle pattern neckline range could invalidate the bullish setup altogether.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Nifty News: GameStop NFT market goes live, Hong Kong’s NFT concept and more

The latest Web3 offering from GameStop sees the official launch of its NFT market, and the Hong Kong government is testing a proof-of-concept NFT at a convention.

The nonfungible token (NFT) marketplace for American video game retailer GameStop has officially gone live on Ethereum (ETH) layer 2 blockchain ImmutableX, all part of the latest Web3 push from the gaming retailer. 

The pair first partnered in February to build the marketplace offering a $100 million grant for NFT content creators and tech developers before a public beta of the NFT marketplace debuted in July.

With the Oct. 31 announcement of the full launch, GameStop’s market will allow for popular Web3 games on ImmutableX such as the role-playing game Illuvium and Gods Unchained to be accessed by users.

Gamestop has worked to launch a series of Web3-powered products over the past year with a beta self-custody crypto wallet released in May that integrates with its NFT marketplace.

In March the retailer also launched its first beta NFT marketplace on Loopring, an Ethereum-based layer-2 protocol.

Most recently in September, GameStop announced a partnership with FTX US aimed at bringing more customers to crypto and working together on e-commerce and online marketing initiatives.

Hong Kong’s proof of concept NFTs

The Hong Kong government on Oct. 31 released a policy statement that set out its stance on virtual assets and detailed its related pilot projects, one of which involved NFTs.

Its NFT-based project is a proof of concept to promote the usage of NFTs with the government Financial Services and the Treasury Bureau (FSTB) and foreign investment department InvestHK issuing NFTs at their flagship Hong Kong Fintech Week event.

The NFT serves as proof of attendance for the conference-goers with the statement saying it's a “digital badge and memento using blockchain technology in celebration of their participation”.

The NFT can also be used to create an Augmented Reality (AR) avatar “to experience the Metaverse” while at the event and holders will receive a discount on tickets for the event in 2023.

Although it's not mentioned what blockchain the NFTs are minted on they can be stored in a crypto wallet, or for those who are without a wallet, can be stored as what the statement calls an “NFT-to-be” with a user storing it on an email address until they create a digital wallet.

Hong Kong Fintech Week kicked off on Oct. 31 and sees speakers from a range of Web3 firms including Yat Siu, co-founder of Animoca Brands, Sam Bankman-Fried, co-founder of FTX, and Sebastien Borget, co-founder of The Sandbox metaverse and others.

Art Gobblers makes over $20M hours after launch

NFT project “Art Gobblers” created by Justin Roiland, the co-creator of the popular animated show Rick and Morty, has seen nearly $20.5 million in ETH volumes just seven hours after launch.

The project is a collaboration between Roiland and venture capital firm Paradigm, and describes itself as an “experimental decentralized art factory.”

According to Blur data, the project is seeing strong launch success with 12,906 ETH in volume at the time of writing.

According to a Paradigm overview, the Art Gobblers ecosystem is intended to work by financially incentivizing artists and collectors in a feedback loop for both to contribute to the project, either with better art, or more money.

A diagram explaining the intention of the Art Gobblers ecosystem. Image: Paradigm

Artists create a drawing using the websites tool which can then be turned into an NFT provided they have enough native tokens called GOO, these NFTs can then be “eaten” by an Art Gobbler which will store the artwork in its “belly gallery” with the NFT artwork associated to that Gobbler on-chain.

The project also enacts other deflationary measures such as restricting the amount of NFTs that can be minted and mechanisms that automatically adjust prices in coordination with an issuance schedule.

The initial mint saw 2,000 “Gobblers” minted with the community expected to spend GOO tokens to mint a further 8,000 over the next 10 years.

Cardano NFTs hit third place for trading volume

Cardano (ADA) NFTs surged in trading volume over the past month placing the blockchain in third place according to an Oct. 27 report by analytics platform DappRadar.

The report said in the last 30 days Cardano’s NFT volume reached $191 million bringing it to the third-largest NFT protocol behind Ethereum and Solana (SOL).

Related: An introduction to decentralized NFT catalogs

The blockchain’s popular NFT marketplace JPG Store saw a 40% increase in trading volume in the last 30 days also which reached a value of $11.2 million.

DappRadar attributes the surge to the blockchain’s Vasil hard fork upgrade that went live on Sep. 22 which brought with it increased efficiency for its smart contracts allowing decentralized applications to deploy and run at lower costs.

More Nifty News:

American National Basketball League (NBA) athlete Steph Curry filed a trademark application for a so-called “Curryverse” that could see the basketball champion granted exclusive rights for, among other things, “metaversal appearances.”

A Japanese city has adopted a metaverse-based school to try to get students to attend classes with students able to explore a virtual campus and classrooms, although the students must gain permission from their real school principals before attending.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

New Apple rules double down on 30% NFT ‘tax’ and geo-limits exchanges

Apple has published rules for NFTs for the first time while clarifying rules around cryptocurrency payments and crypto exchanges.

Technology heavyweight Apple has clarified its App Store rules around nonfungible tokens (NFTs) and cryptocurrency exchanges marking the first time its codified specific rules for NFTs.

The new rules confirm how NFT purchases will be taxed and what they can and can't be used for, while also clarifying rules around when a crypto exchange app can be listed. 

The Oct. 24 update to its App Store guidelines saw language added that allows fo in-app purchases of NFTs, but bars any NFTs acquired elsewhere to be used for anything other than viewing. 

It also allows applications to use in-app purchases to “sell and sell services” related to NFTs such as “minting, listing, and transferring.”

However, the tech company is seemingly double-downing on its NFT “Apple tax” — which lumps in-app NFT purchases into its standard 30% commission rate on all purchases — by making sure all NFT purchases are conducted in-app. 

Apps won't be allowed to include “buttons, external links, or other calls to action” which could give users a way to circumvent app-store commissions when purchasing NFTs. It also prevents apps from using mechanisms "such as [...] QR codes, cryptocurrencies, and cryptocurrency wallets” which could be used to unlock content or functionality within an app.

The rules come despite the company facing criticism for applying its 30% commission on NFT sales conducted through NFT marketplace apps such as  OpenSea or Magic Eden, a move that’s been marked as “grotesquely overpriced” when compared to the average 2.5% commissions on NFT purchases. 

Magic Eden said it removed its service from the App Store after learning of the policy and other NFT marketplaces have scaled back their application functionality with users only able to browse and view their owned NFTs.

Apple's guidelines have also ruled out using crypto for in-app purchases, allowing only fiat currency purchases with a “valid payment method” such as debit or credit cards.

Related: Nodes are going to dethrone tech giants — from Apple to Google

The new guidelines make no changes to Apple’s existing policy on cryptocurrency trading apps put forward by exchanges such as Binance and Coinbase where trades are not subject to the 30% “Apple tax”.

However, new language was added to clarify that crypto exchange apps can only be offered in their app in “countries or regions where the app has appropriate licensing and permissions to provide a cryptocurrency exchange.”

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Nifty News: OpenSea dominance fades, Azuki skateboards fetch $2.5M and more

The largest NFT marketplace is facing headwinds from its competition as OpenSea sees its market share slip whilst its rivals gain significant ground.

Opensea’s dominance begins to waiver

Nonfungible token (NFT) marketplace Opensea has seen its competitors chomping at its ankles this year as they gain market share — turning the market from a “monopoly” into an “oligopoly," a new report states. 

Binance Market Pulse released on Oct. 20 says there has been a slow and steady change in market leadership, noting that while OpenSea is still the dominant marketplace in terms of users and volume, Ethereum (ETH)-based exchanges X2Y2 and Looksrare have been gaining their share of the market over 2022. 

The report also pointed out that OpenSea is facing stiff competition when it comes to Solana (SOL)-based NFTs, its most used native marketplace Magic Eden is a “close second” to the multi-chain OpenSea exchange.

OpenSea’s market dominance in terms of volume peaked in May 2022 but has seen a decline since. Image: Binance

It comes amid a possible sea-change across NFT marketplaces.

On Oct.14, the Solana-native NFT market Magic Eden opted to introduce optional royalties on its platform, following a similar move by the Ethereum-based marketplace X2Y2 in August.

It noted that the “market has been shifting towards optional creator royalties for awhile.”

Binance's Q3 report added that Ethereum overall still dominates holding 65% of the NFT volume market share at the end of the third quarter, but NFT buyers may be moving blockchains in search of profits or following the latest trends.

The data also shows Solana’s NFT sales volume increased by 13% in Q3 and Ethereum’s dropped by 16% since the end of the second quarter.

Record-breaking bids on first wave of ‘Physical Backed Tokens’

The Azuki NFT project has broken the record for the most expensive skateboard ever sold, with the highest bid for a limited-edition 24-karat gold-plated skateboard fetching 309 ETH, or $400,000. 

A total of eight skateboards were sold through its new Physical Backed Token (PBT) technology, netting the project a total of $2.5 million worth of ETH.

The highest bid far surpassed the previous record holder, the over $38,000 “Blowin’ in the Wind Skateboard” created by skateboarder Jamie Thomas which included handwritten lyrics from singer Bob Dylan.

It was the first time the project implemented its Physical Backed Token (PBT) technology standard.

PBT is a token standard created by the project that uses a cryptographic chip to authenticate ownership of a physical item, generating an NFT in a user's crypto wallet after its scanned with a mobile phone.

MLB players union seeks NFT licensing manager

The union representing all Major League Baseball (MLB) players appears to be looking at expanding its members' presence in Web3, as it looks to hire a licensing manager to help expand its portfolio across NFT, Metaverse, digital games and augmented and virtual reality technology.

The job posting by the MLB Players Association states that “NFTs, the Metaverse, wearable technology, and AR/VR are part of our expanding business model” with the role requiring the person to create “strong relationships” with “crypto projects”.

A major role of the MLB Players Association is assisting sponsors seeking to associate their brand or product with players, the association holds the rights to license and use the names, nicknames, likenesses, and other indicating information of MLB players for use to that end.

Warner Bros launches NFT-gated exclusive films

Entertainment company Warner Bros is looking to use NFTs to distribute exclusive content and films after announcing on Oct. 20 that it partnered with Web3 firm Eluvio to launch its NFT-backed “WB Movieverse.”

The “movieverse” is essentially Warner Bros-owned films available online using NFTs as authentication for users to access the film along with related exclusive content such as behind-the-scenes videos and images.

The first offering in its movieverse sees a 4K resolution extended edition of one if its Lord of The Rings titles along with bonus material made available through two tiers of NFTs. 

Related: Magic Eden defends launch of NFT royalty enforcement tool

The sold-out upper tier of 999 NFTs was priced at $100 but now sees an average listing price of $2,500 according to the official secondary listings page, while the lower tier of 10,000 NFTs is priced at $30.

Warner Bros has delved into the NFT space before, recently licensing characters from its DC Comics-owned properties to pop culture brand Funko to sell Walmart-exclusive NFTs.

More Nifty News:

Metaverse casino Slotie has been hit with multiple cease and desist orders from state-level authorities in the United States who allege Slotie hasn’t registered as a broker-dealer, failed to provide the proper disclosures as a gambling platform and consider its NFTs to be unregistered securities.

Ethereum-based NFT marketplace Rarible upgraded its platform on Oct. 20 adding an aggregation tool that allows users to browse and purchase Ethereum NFTs from other marketplaces such as Rarible, OpenSea, LooksRare, X2Y2, and Sudoswap.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

IRS introduces broader ‘Digital Assets’ category ahead of 2022 tax year

An early draft of the 2022 IRS tax form sees cryptocurrencies, stablecoins and nonfungible tokens grouped under a new “Digital Asset” category.

American taxpayers will find a broader, more defined category encompassing cryptocurrencies and nonfungible tokens (NFTs) in their 2022 IRS tax forms. The draft bill released by the Internal Revenue Service features a well-defined Digital Assets section that outlines if and how taxpayers will account for the use of cryptocurrencies, stablecoins and NFTs.

Page 16 of the draft defines Digital Assets as any digital representations of the value recorded on a “cryptographically secured distributed ledger or any similar technology.” 2021’s tax form required taxpayers to indicate whether they had received, sold or exchanged in “virtual currency” — with this term changing in the yet-to-issued 1040 tax form for 2022.

Taxpayers are required to answer the Digital Assets section of their income tax return whether or not they have engaged in digital asset transactions during the tax year.

A number of situations will require American taxpayers to indicate yes to the question on Digital Assets of Form 1040 or 1040-SR. This includes receiving as a reward, award or payment for property or services or sold, exchanged, gifted or ‘disposed of a digital asset in 2022.

Related: IRS to summon users who don’t report and pay tax on crypto transactions

This would include instances where an individual received digital assets as payment for property or services provided or as a result of a reward or award. Receiving new digital assets through mining or staking also falls under this category, as does transacting digital assets in exchange for goods or services as well as exchanging or trading digital assets.

Holding cryptocurrencies, stablecoins or NFTs as well as staking tokens is also clearly addressed in the draft tax form:

“You have a financial interest in a digital asset if you are the owner of record of a digital asset, or have an ownership stake in an account that holds one or more digital assets, including the rights and obligations to acquire a financial interest, or you own a wallet that holds digital assets.”

The Digital Assets explainer also outlined conditions that do not require taxpayers to check Yes on their tax forms. If an individual holds a digital asset in a wallet or account, transfers digital assets from a wallet or account to another wallet or account owned by themselves or acquires digital assets using United States dollars or other fiat currencies through electronic platforms like PayPal.

Digital asset transactions can be clearly classed in either capital gains or income sections of the 2022 tax return.

If an individual disposed of any digital asset during the year which was held as a capital asset, they are expected to calculate their capital gain or loss and report on Schedule D of the tax return.

If individuals received digital assets as payment for services or sold digital assets to customers in a trade or business, this would need to be reported as income in its specific category.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Bored Ape creators and other NFT projects investigated by SEC probe

A source familiar with the matter said the SEC is looking into whether certain NFTs from Yuga Labs could be “more akin to stocks.”

Sources say that the U.S. Securities and Exchange Commission (SEC) probe into Yuga Labs is actually part of a wider investigation into the nonfungible token (NFT) market, which already came to light in March.

On Oct. 11, a report from Bloomberg citing a source “familiar with the matter” said the SEC is investigating Yuga Labs over whether certain NFTs are “more akin to stocks” and whether the sales of certain digital assets violate federal laws.

However, Cointelegraph understands that the investigation is part of the ongoing SEC probe into the wider NFT market, which is looking at whether certain NFTs and fractional NFTs could fall under federal securities laws.

In March, anonymous sources told Bloomberg the SEC was investigating NFT creators and marketplaces whether “certain nonfungible tokens […] are being utilized to raise money like traditional securities.”

Cointelegraph has contacted the SEC for comment but has not received an immediate response.

Meanwhile, Yuga Labs appears to be looking at the bright side of things. In a statement to Cointelegraph it said:

“It’s well-known that policymakers and regulators have sought to learn more about the novel world of Web3,” said a Yuga Labs spokesperson. 

“We hope to partner with the rest of the industry and regulators to define and shape the burgeoning ecosystem. As a leader in the space, Yuga is committed to fully cooperating with any inquiries along the way.”

Bloomberg also reported the regulator is examining the distribution of ApeCoin, which was given to the holders of Bored Ape Yacht Club (BAYC) and other NFTs.

Related: Anon news group makes numerous allegations against Yuga Labs and Bored Ape Yacht Club

According to the ApeCoin website, Yuga Labs is a community member in the ApeCoin DAO and will adopt APE as the primary token across its new projects.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Critics can’t stop NFTs from becoming a mainstay of daily life

Nonfungible tokens are about more than Bored Apes. They fulfill a host of functions better than existing systems.

Some critics deem nonfungible tokens (NFTs) to be totally worthless. They don’t see the point. Why should they? The industry hasn’t covered itself in glory with countless rug pulls and celebrity endorsements with prompt pump-and-dumps.

But, this is missing the point. Already most of the digital and physical objects we use in real life are unique, they are not fungible: this means they cannot be copied, substituted or subdivided.

Detractors might still say, well, what’s the point? NFTs are immutable and verifiable assets on the blockchain — these sound like industry buzzwords with little meaning. However, they go a long way in exposing the untold use cases.

Contrarians exist in every phase of technological innovation; You can go back to the literal Luddites of 19th century England who destroyed machinery threatening their jobs, or more presciently, you can point to those who thought the internet was going to be a short-lived craze.

We are ever-closer to digitizing swathes of our lives, and not in a metaverse-owns-you-now type of way, but instead through the tokenization of assets with transfer made easier than ever.

Related: Get ready for the feds to start indicting NFT traders

It’s true in a world of crypto mass adoption, like with the internet, users will likely hold little knowledge of the technology underpinning the system. NFTs may well be used abundantly in this scenario: Users simply won’t care about past negative connotations when they can access a brilliant new way of owning, renting and selling.

Near-negligible transaction fees is the goal, as is an easily navigable user interface. Right now, there isn’t the groundbreaking solution needed to break down barriers and remove existing stigmas.

NFTs can irrevocably alter the way we exchange value. Here lies an opportunity to digitize assets in an open economy and in the process, hasten a step toward legitimacy for blockchain solutions in the mainstream market.

Leveraging the power of NFTs

First mover’s advantage in the burgeoning tech world is not to be underestimated.

But, leading players in the NFT space have garnered the wrong type of mainstream attention and there is a perception problem. Cynical corners of the media tend to cast a skeptical eye over blockchain-related projects and paint the space as riddled with rug pulls and abandoned road maps. This is a view that sorely lacks nuance and understanding; do they realize how many people lost money in the dot-com bubble?

Related: Throw your Bored Apes in the trash

What is often overlooked — and this will come with the maturation of the technology — is how NFTs can change marketplaces: in gaming, as well as in all conceivable intellectual property as we know it. Mainstream success for NFT solutions will result from the utility for commercial and retail users, and it is not, therefore, likely to be so intrinsically tied to volatile crypto markets.

NFTs just have too many use cases to not become incredibly useful. Bored Apes started with profile pictures, but its purveyor, Yuga Labs, is already building off the springboard of the huge community it gained from its notoriety with plans for a metaverse and gaming platform.

This dramatic pivot from Yuga Labs indicates NFTs carry a much greater purpose than just art and collectibles and hints at a viable path to mass adoption.

NFTs just fulfill functions much better than existing systems, which will manifest across industry and consumer markets once efficient and effective solutions are created.

What makes an adoptable NFT?

The pillars of a successful NFT project are currently predicated on three major aspects: a strong community, exclusivity and utility.

You need people to talk about the NFTs in a positive light and share information to one another. A tangible sense of exclusivity is present in the most popular projects and this should extend to the implementation of NFTs in any media form. If one million other people have the same skin as you in a game, you won’t really see it being worth keeping.

The utility provides real-world value to buying and holding an NFT. If a consumer buys a brand new car, they know exactly what to expect, more or less. Of course, in the case of an NFT, you want it to look good in most cases, but to pique mainstream interest, there must be an element of it serving a grander objective.

Indeed, an oft-neglected viewpoint is how the utility of NFTs can unlock mainstream success. Digital assets represented by NFTs hold untapped potential to revolutionize both products and services. Your money is safe when the asset is not liable to drastic changes in value because it serves a purpose, again, in the real world.

A notable shift and evolution in NFTs beyond how we perceive them in the present day is a prerequisite for this next step. The industry is slowly moving toward the ‘normalization’ of nonfungible tokens wherein value is established and use cases are realized.

One great example of this is in secondary ticket markets, which could allow people to trade verifiable NFT passes to a show, sports game or concert through a smart contract. The blockchain, in this case, knows the ticket is legitimate because that’s the nature of the technology: Information cannot be changed once registered in a transaction.

On-chain tickets are an obvious use case. From a consumer perspective, there is potential to safely buy tickets on the resale market for any event. Blockchain provides proof of purchase from the original ticket vendor, as well as a price history and further makes transfer very simple with the smart contract only releasing the ticket upon the confirmation of funds reaching the seller’s wallet.

Processes could be made much fairer for those using the secondary market and simultaneously nullify the efforts of scalpers: If price increases were limited to 50% additional to face value, with the artist receiving royalties for the resale, in one fell swoop, we deal with the issue of performers struggling to capitalize on their success and the problem of people being ripped off.

Retail bosses may imagine a world where all products are uniquely registered in the digital world; do they know yet these could be represented by NFTs?

Rights to a rented home is another interesting possibility. Upon purchasing the NFT, which gives you the right to use the property for a period of time, what if you can upload images to the blockchain showing the condition of the house you are leasing? A legal challenge over the landlord keeping a security deposit can be swiftly dismissed or indeed proven when such matters are immutably proven with the aid of blockchain.

We haven’t even scratched the surface of business utility for NFTs. There is pervasive fraud in supply chains with countless incidents of double financing, where malicious actors use copies of the same paperwork to illegally obtain money from multiple sources. With blockchain, this will disappear overnight as each and every shipment can be represented by only one single NFT that documents everything delivered — and, indeed, tracks it every step of the way.

More than just assets

The winning combo of blockchain verification and self-custody can empower consumers and make their online lives far more secure than is currently possible.

A passport could be stored on a mobile device and locked behind multi-factor authentication: the entire process of renewing this crucial travel document can be made much quicker when there is a totally digital solution. Represented as an NFT, it further becomes harder to create a forgery which reduces the burden of security on governing authorities.

Related: A cure for copyright ills? NFTs promise to empower creative economies

Medical records are another use case that could revolutionize the often antiquated systems in existence across hospitals around the world. Collating information in a secure manner is not an easy process nor is sharing this data with other entities, which, in some cases, can be an urgent matter. NFTs solve this issue as, even failing the computer sharing processes in place, the individual may gain the ability to access and share their own records.

We are swiftly moving toward a world where individuals take control of their information and choose who they share it with. Furthermore, digital assets will belong solely to them without the need to rely on centralized bodies to store and allow transfers to be made.

Challenges remain

Blockchains still have the technical limitations of throughput, scalability and congestion. There isn’t a single chain in existence that could onboard half a billion users, but we are steadily approaching the day when this becomes a reality.

Instead of listening to the noise of those who dare not try to understand the technology, we should be focused on collectively delivering better outcomes with a view to bringing an entirely novel way of doing things across all industries.

Yet, much development lies ahead. The mainstream media and critics will not destigmatize NFTs on their own. The use of blockchain in this manner doesn’t fit into their worldview.

When mass adoption eventually arrives, and I believe this is only a matter of time, we will swiftly enter into a new digital age built upon the blockchain. People will scarcely know what makes their seamless transfer of digital assets and information possible. But, they will use it and NFTs will vastly improve the way they conduct their lives in both digital spaces and through real-world applications. This is certainly a future worth fighting for through all and any disparaging noise.

Rong Kai Wong is the chief operating officer at Parsiq. He served as head of operations in a Singaporean police division of more than 700 police officers before joining Binance as director of Binance X, the digital asset exchange’s $100 million BSC Accelerator Fund.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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