Singapore High Court of Justice Qualifies NFTs as Assets of Value

In a much-awaited legal ruling, the High Court of Singapore has labeled NFTs as valuable assets. And for good reason, all over the world, the popularity of NFTs has skyrocketed since 2017. NFTs have thus become highly prized digital assets in the crypto ecosystem.

Thanks to their potential for future adoption and especially thanks to the significant capital gains that many investors have been able to realize, non-fungible tokens have been able to take a significant market share in decentralized finance. But what about their legal qualification and their tax liability? The Singapore High Court of Justice provides us with its answers.

The legal status of NFTs according to the Singapore High Court of Justice

The Singapore High Court of Justice ruled a few days ago that les Tokens non fongibles (NFT) could be considered protectable digital assets as well as a form of legal property, as they meet certain legal requirements.

Thus, two main elements have been highlighted:

The fact that an NFT can be distinguished from another by its unique characteristics as well as its registration on the blockchain which gives it a certain date.
It is possible to identify an owner who can be recognized by third parties (a third party in legal language means another person).

The judge made the decision in response to an injunction from last May which was granted to an individual named Janesh Rajkumar. The goal in this case is to prevent any potential sale and transfer of ownership of an NFT that he previously owned.

Thus, the plaintiff sought to repossess his NFT Bored Ape Yacht Club (BAYC) which he had used as collateral after being lent cryptocurrencies by a lender on the NFTfi platform.

However, after failing to repay the loan on the agreed date, Janesh Rajkumar reached an extension agreement with the lender. A little later, his NFT was seized from his virtual wallet.

Janesh Rajkumar then filed a lawsuit to repossess her NFT even though the place of residence as well as the real identity of the lender was unknown.

Indeed, only the addresses of the electronic wallets, the lending platform and the social networks used by the parties were identifiable.

This is how the Singaporean justice approved this action by putting in place an injunction to prevent the sale or transfer of BAYC NFT.

This type of injunction is the first in the world in a commercial dispute. As a result, NFTs are recognized as valuable assets that deserve protection.

Thus, the injunction as well as the judgment imply a legal recognition of the fact that NFTs are considered digital assets. Therefore, people who invest in this particular asset class have rights that must be protected.

With this new ruling by the Singapore High Court of Justice, NFT holders can rejoice that their NFTs may be entitled to some legal protection.

And for good reason, the characterization of NFTs as a distinct form of legal property and a digital asset constitutes an important development in the recognition of NFTs on a legal level.

This decision could also set a precedent for other future disputes that would be brought before the courts in Singapore.

However, it should be remembered that each state has its own legislative and judicial system. Thus, this court decision by the Singaporean judge has no direct impact on the rights of investors elsewhere in the world.