Exploring the assetisation and financialisation of Non-Fungible Tokens: Opportunities and regulatory implications

• Main Authors: CHIU, Iris H. Y., ALLEN, J.G.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2022
• Subjects: Blockchain; financial regulation; non-fungible tokens; NFTs; Banking and Finance Law; Finance and Financial Management; Technology and Innovation
• Online Access: https://ink.library.smu.edu.sg/sol_research/4299; https://ink.library.smu.edu.sg/context/sol_research/article/6257/viewcontent/SSRN_id4051912_av.pdf
• Institution: Singapore Management University

This article explores the emerging phenomenon of use cases for Non-fungible Tokens (NFTs) in novel forms of crypto-finance, a stage we call “NFT financialisation”, that can be developed from stages of consumption and commoditisation of NFTs, which are increasingly observed. Despite the emerging contests regarding property rights conferred by NFTs, the needs for commoditisation and financialisation in NFT markets would likely shape the delineation and framing of such rights in order for users to exploit the asset potential of NFTs. We argue that an institutional response is timely and beneficial for NFT financialisation. Financial regulatory governance can provide the institutions of market certainty and order, also fostering the clarification and standardisation of property framing underlying NFTs. We explore aspects of financial regulatory governance for supporting the investment mobilisation of NFTs and suggest that these provide insights too for the broader regulatory agenda for crypto-finance, including novel forms of fund-raising and Decentralised Finance (DeFi). Such financial regulatory governance involves reform and we provide a critical discussion of the EU’s Markets in Crypto-assets Regulation in relation to NFT financialisation. We also suggest that NFT financialisation reinforces the need for financial regulatory agencies to confront the challenges that crypto-finance brings, in relation to unconventional products and services, by reconsidering the limitations of their scope and mandates.