The topic of NFTs (non-fungible tokens) is one of the hottest in the blockchain space – and for good reason. In both use cases and total market cap, the NFT industry is exploding.
One report estimated the valuation of the NFT art space, alone, at $41 billion in 2021. Consider that NFTs are being used not only for art, but also for things like intellectual property, gaming, and real estate and it’s not difficult to see why people are flocking to the NFT space.
With so much cash flowing into the NFT space, however, controversy and conflicts are inevitable. One of the more concerning aspects of non-fungible tokens today is legality, especially in an environment that is very new and still widely unregulated. The result is a huge gap in knowledge and certainty in matters that can result in tremendous financial gains and losses – a gap that may be filled by NFT Lawyers.
If you do find yourself in the position of seeking counsel from an NFT Lawyer, you’ll give yourself the best chance of success by doing your own research first. For that reason, here’s our list of 5 Things You Must Consider Before Hiring an NFT Lawyer.
Relevant NFT Niche
In the same way that lawyers specialize in niches like divorce or taxes, NFT lawyers can and do specialize in more specific NFT niches. So before you go and hire the first “NFT Lawyer” that appears in your search results, you’ll want to ensure that you understand what niche your issue falls into – and hire a professional with specific experience in that niche. To assist you in this, we’ll now cover some of the most notable NFT niches – and briefly describe each as we go along.
NFT Tax Concerns
Taxes are an important concern in any financial matter; NFTs are no different. Whether you’re buying, selling, or minting NFTs, you’ll want to be sure that you’re complying to any and all necessary tax regulations.
If you find yourself unclear on what taxes you’re beholden to, hiring a lawyer might be extremely wise. Especially when the consequences of not complying with tax law could result in consequences like a $250,000 fine and jail time, even the most expensive lawyer seems like a bargain.
Unfortunately, taxes are just one of the potentially confusing and cumbersome regulatory considerations involved with NFTs. There are a number of other regulations you may need to ensure that you’re complying with. These include but are not limited to:
- Anti-Money Laundering
- SEC (Securities and Exchange Commission) Compliance
- State and Federal Regulations
Are you creating your own NFTs? If so, you’ll have a whole host of concerns – especially with licensing – that might benefit from the experience of an NFT lawyer.
There are various questions and considerations surrounding the ownership of NFTs that stump even people who’ve been in the NFT space for some time. If you find yourself with these types of questions, you’ll want to seek out someone who’s dealt with licensing, specifically, rather than an NFT lawyer with most of his or her experience in taxes, for example.
Level of Pertinent Experience
This consideration is fairly obvious, but we’d be remiss if we didn’t mention it. Depending on what’s at stake in your specific concern, you’ll want to choose your NFT lawyer wisely. If you have a fairly simple question, you might be able to hire an entry-level professional to put your mind at ease. If your situation is more complicated and/or serious, however, you’ll want to be sure that the NFT lawyer you hire has dealt with similar situations before.
During the vetting process, feel free to ask whomever you’re talking to about their specific experience and how it relates to your case. It’s your right as a paying customer!
Reviews and Past Clients
Part of your vetting process for finding the right NFT lawyer for you absolutely must include checking up on their track record. Any experienced lawyer should have a considerable portfolio of work and clients that they can point to when asked for proof of competence by new potential clients.
While you’re browsing a given NFT lawyer’s track record, you’ll want to pay attention not only to whether or not they’ve been successful, but also who they’ve been successful with helping.
In the same way that some NFT lawyers have more experience with a niche like taxes rather than licensing, for example, some NFT lawyers specialize in helping businesses rather than individuals. Logically, you’ll want to hire a lawyer with significant experience in helping clients that have been similar to you with issues that are similar to what you’re dealing with, specifically.
Laws, regulations, and other complications are highly dependent on geographic location. This fact applies to nearly every legal situation, but might be especially true for cryptocurrency and NFTs while these technologies are still so new.
The truth is that most countries and their regulatory bodies are still in the process of figuring out how to categorize and deal with blockchain technologies. South Korea, for example, has changed its regulations surrounding cryptocurrency multiple times in just the past couple years.
Some countries, including the UK, Singapore, and Australia, currently look at cryptocurrency as property while other countries do not.
One particularly confusing example is the United States which has at least three different regulatory bodies with three different classifications for cryptocurrency:
- The SEC deals with crypto as securities.
- The CFTC sees Bitcoin, specifically, as a commodity.
- The US treasury labels crypto as currency.
These classifications carry very specific legal ramifications that you may need to be aware of and deal with properly. For this reason, you’ll want to be sure that the NFT lawyer you hire is well aware of the regulatory landscape relevant to your concerns.
When we deal with things as cold, hard, and dry as legal matters, it can be easy to overlook something like personality or character, but we shouldn’t. Even if a given professional is experienced and knowledgeable in the exact issue that you’re seeking a lawyer for, it might be a mistake to hire him or her if they don’t seem like the right fit on a personal level.
Like level of pertinent experience, this is one consideration that may be especially important if your project will require more time, work, and interaction with your NFT lawyer.
Again, if you have a fairly straightforward question, for example, you might be able to get by with just a quick consultation – and something like personality won’t be so important. On the other hand, if you’re in the process of creating your own NFTs and you’re looking for a lawyer to work with you every step of the way, you’ll want to make sure that you get along well with whoever you hire.
Some specific traits that you might want to be on the lookout for include:
- Responsiveness.Is it easy to get in touch with the individual? Do they tend to respond quickly?
- Warmth. Part of your NFT lawyer’s job may be putting your mind at ease. Does this person make you feel comfortable? Like you’re in good hands?
- Articulation. One of the main reasons you need a lawyer in the first place is their knowledge of complex matters. Are they able to explain things in a way that you can easily understand?
Questions to Ask an NFT Lawyer
While the above list of 5 Things You Must Consider Before Hiring an NFT Lawyer is fairly comprehensive, we want to assist you in your vetting process as much as possible. So when you’ve gone through the trouble of contacting different lawyers and need help being sure that any individual lawyer is the right one, you might find it helpful to have specific questions to ask them. Here are some great questions to start with:
- “Have you helped clients like me before?”
- “Have you dealt with my specific situation before?”
- “Are you familiar with the regulations and specific concerns of my geographic location?”
- “Of the cases like mine that you’ve dealt with, what were the outcomes?”
- “How long – in terms of billable hours or business days – do you estimate that it will take to handle my concerns?”
- “What do you estimate the cost will be for resolving my situation?”
- “Are there any complications that may arise while you’re handling my case? In other words, is my case straightforward or not?”
- “Will my case require following up after this phase is completed? If so, how will you be able to help me then?”
Regardless of what type of issue you’re dealing with, you can rest assured that you’re doing the right thing by seeking an NFT lawyer to help you. As long as you do your due diligence and make every effort to hire the right professional – by keeping the above list of 5 considerations in mind – the expertise they provide will be invaluable. Contact our experienced team today.