The NFT market is now worth more than $ 7 billion, but legal issues facing the emerging sector could hamper its growth, says JPMorgan | Currency News | Financial and business news

The NFT market is now worth more than $ 7 billion, but legal issues facing the emerging sector could hamper its growth, says JPMorgan |  Currency News |  Financial and business news
  • A recent boom in NFT sales has slammed the emerging market to $ 7 billion, according to JPMorgan.
  • While the NFT market has strong prospects, legal barriers may hinder growth.
  • “The growth of the NFT market will be conditional on NFT market participants and regulators addressing the legal issues facing the industry,” JPMorgan said.

The NFT market has seen explosive growth this year as sales of digital art objects hover at a monthly rate of about $ 2 billion, JPMorgan said in a note Thursday.

This is a large increase from the monthly sales volume of around $ 400 million at the beginning of the year, and according to the bank, it has helped drive the market value of the NFT universe to around $ 7 billion.

In addition to more NFT sales, an increase in the dollar value of many digitized tokens has contributed to the increase in market value, with high-profile sales of CryptoPunks and work from artists like Beeple raising tens of millions of dollars.

“Activity in the NFT markets appears to be still quite erratic with occasional outbreaks rather than sustained increases in volume,” JPMorgan noted.

The growth in the NFT market has caught the attention of older auction houses like Sotheby’s and Christie’s, both of which have launched their own NFT marketplaces to get into the action. According to the note, these movements should only add to the sector’s continued gains.

“By creating marketplaces for illiquid assets such as digital art, collectibles, music, games and other assets, the NFT universe is certainly ready to continue to grow strongly in the coming years because it helps solve the problem of adding liquidity in naturally illiquid assets, such as collectibles, “said JPMorgan.

But the growth of the NFT market going forward continues to face legal and regulatory barriers affecting copyrights, intellectual property rights, token ownership vs. content ownership and authentication.

And because NFTs are non-fungible, they are not securities and are not subject to securities regulations in many countries.

“In turn, lack of regulation makes NFTs vulnerable to copyright theft, unauthorized replication and fraud and inventory failure,” JPMorgan said. And aside from legal risks, NFTs still need to overcome protocol risks like hacking, platform-related management risks and high gas charges stemming from the ethereum network, the bank said.

All-in, this means that the prospects of the NFT market are “conditional on NFT market participants and regulators addressing the legal issues facing the industry,” JPMorgan concluded.

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