The German financial regulator, BaFin, has issued an explanatory note in its journal, outlining its current position on the legal classification of non-fungible tokens (NFTs). BaFin suggests that NFTs should be classified on a case-by-case basis and, for now, is not prepared to classify them as securities.
BaFin has identified a scenario where an NFT that contains documentation of exploitation rights or ownership, such as a promise of distribution, could be considered an investment. BaFin does not expect NFTs to comply with the licensing requirements of the Payment Services Supervision Act due to classification difficulties. For instance, apart from fungibles, which fall under the financial instrument category, NFTs are also exempt from BaFin’s Anti-Money Laundering supervision. However, if NFTs were separately considered “crypto assets,” they would need to comply with AML supervision.
In summary, BaFin has adopted a cautious and nuanced approach to NFTs’ classification. Given the difficulties in classifying NFTs, BaFin does not expect them to comply with the licensing requirements of the Payment Services Supervision Act or fall under its Anti-Money Laundering supervision.
German regulator BaFin takes a case-by-case approach to classifying NFTs as securities
