It is believed that NFTs are able to introduce a more efficient way to verify title and real estate when it comes to real estate/physical assets – although applications like these are still in the early stages of development. It also remains to be seen whether the traditional approach to documenting titles on paper and pen contained in the current legal framework will evolve and adopt the use of these new digital verification methods. Without an express agreement between the NFT artist/creator and the NFT buyer, IP rights, including copyright, would remain the property of the NFT artist/creator (Mike Shinoda is an example). A buyer of NFT who displays, copies or uses the work for commercial purposes without the consent of the copyright owner is liable for copyright infringement. To date, there has been no issuance of NFTs in Malaysia that meets all the requirements of the above-mentioned Requirements Regulation or that can be legally traded as securities. According to a statement from the Chairman of the Securities and Exchange Commission (“SC”) dated March 28, 2022, the SC will address the regulation of the issuance of NFTs on a case-by-case basis, depending on the type of NFT tokens and projects, as well as the activities conducted in the NFT2 market. (a) Copyright: the exclusive and transferable legal right granted to the author for a specified number of years to print, publish, perform, film or record literary, artistic or musical material. The Malaysian Ministry of Communications has proposed legalizing non-fungible tokens (NFTs) to increase youth participation in the cryptocurrency space. The crypto industry is governed by the Central Bank, Bank Negara Malaysia and the Securities Commission. While Malaysian courts had recognized Bitcoin as collateral and merchandise under the Contracts Act of 1950, there is currently no law regulating NFTs in Malaysia. It is advisable that stakeholders or NFT actors consult legal advice to protect their own rights. It is important to understand that DTVs are purchased for many different reasons: as an investment, as property for pleasure (e.g.
art/music) and for commercial purposes as a retail business. As the world of NFTs attracts more and more attention and investment, the question often arises: is it even legal to trade NFTs? In our previous article on cryptocurrency, we touched on some Malaysian legal issues related to cryptocurrency in general. Cryptocurrencies are digital assets that operate on blockchains based on stored digital information. There is another type of digital asset that works in the same way: non-fungible tokens (“NFTs”). A potential legal issue that would arise from the sale and purchase of NFTs would be the copyright in the NFT, in particular NFTs affecting artistic works such as drawings, music, etc. Pursuant to section 7 of the Copyright Act 1987 (hereinafter referred to as “the Act”), authors of literary works, musical works, artistic works, films, sound recordings and broadcasts which have been written, recorded or otherwise materialized are protected by copyright, irrespective of the quality and purpose for which such works were created. Under Section 13(1) of the Act, copyright includes the exclusive right to control the reproduction and distribution of copies of the work in Malaysia. Some reports also suggest that Honduras is another country preparing to adopt Bitcoin (BTC) as legal tender, following the steps of El Salvador, which enforced its Bitcoin law in September 2021. “We must not allow El Salvador to be the only country to escape dollar hegemony,” Honduran President Xiomara Castro was quoted as saying.
This finally brings us to the next question. Are cryptocurrency and NFT legal in Malaysia? Given the various legal issues surrounding DTV transactions that may constitute liability if not handled appropriately, potential market participants are advised to seek appropriate legal advice before entering the NFt market. Malaysia`s Ministry of Communications is proposing to introduce cryptocurrency as legal tender “to help the younger generation who are actively using the currency, especially on non-fungible token trading (NFT) platforms t.co/m4vXcsfMRr Deputy Minister of Communications and Multimedia Datuk Zahidi Zainul Abidin has called on Malaysian regulators to consider some use cases of cryptocurrencies and non-fungible tokens (NFTs). legalize, local news agency Harian Metro reported Monday. Although NFT-related operations are new territory, it is likely that these operations are protected by Malaysian contract law. However, as the NFT industry develops rapidly, direct regulation is needed to avoid potential legal issues, especially those involving fraud, fraud, and hacking. Both Bank Negara Malaysia and the Securities Commission of Malaysia have introduced cryptocurrency regulations to prevent the use and abuse of open technologies for illegal activities such as money laundering, terrorist financing, fraud, and more. In Malaysia, securities may only be legally offered through a Malaysia-registered Digital Asset Exchange (DAX) or otherwise with the approval of the Securities Commission Malaysia (SC).
A regulated DAX would result in other regulatory obligations such as know-your-customer checks and anti-money laundering compliance. Therefore, if the NFt is considered an investment or a security, it would be desirable to consider whether the financial services rules would apply. The appropriate approach would be to consider the underlying characterization of the NFt to be created or traded and whether the NFts bear the characteristics of a “security”. In early March, Malaysian Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz reiterated that payments in cryptocurrencies such as Bitcoin and Ether (ETH) are illegal in the country because cryptocurrencies do not match the universal properties of the currency. Malaysia`s finance minister has already warned that crypto payments are illegal because they do not match the universal properties of the currency. This injunction is expected to be the first in Asia to be issued with respect to NFTs.9 This is a remarkable development, as it paves the way for a certain level of legal protection for NFT-related transactions in an otherwise unregulated company. Malaysia`s Ministry of Communications and Multimedia (KKMM) is reportedly supporting cryptocurrency adoption, with the deputy minister calling on the government to legalize cryptocurrency. (b) Trademark: a symbol, word or word which has been lawfully registered or established by use as an agent of a company or product. (d) Design: protects the visual appearance of a product or item and gives you exclusive rights to that appearance, where applicable, there is a legal right to prevent an unauthorized party from creating or using your design. In this article, we look at some basic legal issues regarding the use of NFT in Malaysia. 6.
www.globallegalinsights.com/practiceareas/fintech-laws-and-regulations/2-the-regulation-of-non-fungible-tokens-in-the-united-states. In addition, compliance with the law ensures that you are protected from sanctions and long-term legal consequences. It will also keep you afloat and succeed in this new space for the long haul.