Earlier this week, while talking about the proposed cryptocurrency Bill, Finance Minister Nirmala Sitharaman said that the government is also discussing the regulation of non-fungible tokens (NFTs).
NFTs are a type of digital asset which use the blockchain to document the ownership of items such as images, videos and other collectibles.
Globally, the total market cap of NFTs is $18,369,471.87 as on December 1, 2021, according to global crypto exchange coinmarketcap.com and increased by 28.49 per cent in the last 24 hours.
Will Cryptocurrency Regulation Impact NFTs?
We spoke to some experts to understand the proposed cryptocurrency Bill’s impact on NFTs.
This will also depend on how NFTs are categorised. Unlike cryptocurrencies, many NFTs are backed by physical assets.
“It (the Bill) may or may not (impact NFTs). It all depends on the way the Bill is structured and what they include in the definition,” says Manish Kumar, co-founder of two blockchain-based financial markets platforms GREX and RealX.
Kumar explains that though both cryptocurrencies and NFTs have a stored digital record on a blockchain, many NFTs are backed by physical assets which is not the case with cryptocurrencies. So how the Bill defines cryptocurrencies may make a difference.
Fantico group CEO Abhayanand Singh told Outlook Money in November that they offer a physical counterpart to the NFTs. For example, along with the NFT, they also have the physical items such as the costume that Amitabh Bachchan wore in the film Shahenshah, Akshay Kumar’s jacket from Dhadkan, Praneeti Chopra’s costume from The Girl On The Train and Manoj Bajpayee’s costume from Bhonsle.
However, some experts believe that since cryptocurrencies and NFTs belong to the same family of blockchain, the Bill will impact both.
“NFTs are a subset of crypto tokens or cryptocurrencies. Non-fungible tokens along with other tokens such as utility tokens, fan tokens, stablecoins, privacy coins are integral components of the digital asset ecosystem. Any regulation adversely impacting cryptocurrencies will jeopardize the growth and associated business activity with digital tokens including NFT,” says Sharat Chandra, a blockchain and emerging tech evangelist.
Growing NFT Marketplace in India
The hype in cryptocurrency has also resulted in a boom for the NFT market globally. As per data shared by WazirX NFT Marketplace, it has added 898 new NFT creators so far since its launch on June 1, 2021, and added 685 collectors during the same period.
“Our current set of users are early adopters, tech-savvy creators and collectors, who believe in this underlying belief. NFTs as a stream of revenue or as an asset were unavailable to users before the pandemic. NFTs are ruling the internet right now,” says Vishakha Singh, vice-president, WazirX NFT Marketplace. She added that the cryptocurrency Bill will bring clarity on the classification and taxation of NFTs.
The NFT marketplace in India is growing with several celebrities, including Bollywood stars Amitabh Bachchan, Salman Khan, Sunny Leone and others, launching or about to launch their NFTs.
Bachchan recently launched NFTs and personal collectibles on NFT platform beyondlife.club. These included his autographed vintage posters, a recital of his father's famous poem Madhushala, and other items associated with his stardom. In a recent auction, the digital collectibles from his NFT series were sold for roughly $966,000, according to beyondlife.club.
Khan along with NFT platform BollyCoin is expected to launch his NFT in December. He has successfully closed its pre-sale round of 20 million tokens worth $2 million within a month, according to BollyCoin.
Actor-cum-politician Kamal Haasan has partnered with Fantico, an Indian licensed digital collectibles platform, to launch his own NFT collection.
Sunny Leone’s NFT collection, titled “Misfitz”, has 9,600 NFTs that are “completely unique, minted on the Ethereum blockchain”, according to Misfitz.
However, experts believe that the NFT market is still young. “We expect to see many NFT use cases emerge in the next one year. At this point of time, we are only focused on introducing as many use cases as possible,” says Singh.