Non-Fungible Tokens (NFTs) have taken the world by storm, with the market estimated at around $70 billion and applications stretching across art, gaming, and finance. Yet, amid this innovation, the rights of consumers are disturbingly overlooked. As NFTs become more mainstream, the lack of clear standards in Intellectual Property (IP) licensing for NFTs, especially for Picture-for-Profile (PFP) projects, has left consumers exposed to confusion and legal vulnerability.
NFTs link digital images to unique tokens, authenticating ownership. But this ownership is far from straightforward. PFP projects often sell thousands of NFTs with unique traits, intending to create communities around these assets. Holders may get certain rights—such as using the image commercially or participating in project events. However, without industry-wide licensing standards, consumers face inconsistencies and a lack of transparency about what they actually own.
Our research
The NFT IP Report aims to address the lack of standardized intellectual property (IP) licenses in NFT-based Picture-for-Profile (PFP) projects, which currently vary widely in their rights and protections. By analyzing 100 PFP projects, the study examines the types and terms of IP licenses used, highlighting the need for greater transparency and consistency to protect consumers. The report concludes that standardized licenses would enhance consumer protection, reduce project costs, and foster a more trustworthy NFT ecosystem, recommending further research and the inclusion of license information on marketplaces for informed consumer engagement. Our next steps leverage APIs to pull more data in a real-time dashboard to compare IP licenses used by PFP Projects.
Tepid industry license standards
One of the most common licenses that emerged in our research is the NFT2.0 license. Introduced in 2018, this license was designed to address NFT related licensing issues by specifying ownership rights, including personal and limited commercial use. While it seemed a step forward, it’s still not universally adopted. Many projects use customized licenses, and others default to “No License,” leaving consumers reliant on copyright laws of uncertain jurisdictions. The patchwork of practices has created a landscape where consumers may unknowingly infringe copyright or face legal action for unauthorized use of their NFT.
To add insult to injury, we cannot forget that depending on the license (or lack of license) used, IP licenses can change after an NFT’s sale. The community learned this the hard way when the Moonbirds project retroactively applied a Creative Commons license. This lack of stability undermines consumer trust and threatens the reputation of the NFT industry as a whole.
Industry standards today…or regulations tomorrow
An absence of standards isn’t just an inconvenience; it is a consumer protection crisis. Imagine purchasing a digital asset for hundreds or thousands of dollars, only to find the project has modified or entirely removed your rights. Additionally, marketplaces like OpenSea, which dominate the NFT ecosystem, rarely provide accessible licensing information for consumers, exacerbating the opacity.
Standardizing NFT IP licenses benefits consumers and industry. For consumers, clear guidelines would reduce risks of infringement and legal uncertainty. For creators, standard licenses would lower the cost of compliance and promote trust within their communities. For industry, a consistent licensing framework would stave off regulatory scrutiny and foster a more secure market environment.
The NFT sector has yet to settle on any IP standard, despite efforts to adopt licenses like NFT2.0 and “Can’t Be Evil” (CBE). Until it does, consumers will remain vulnerable in a high-stakes market. Industry players must prioritize transparency and ensure that NFT marketplaces prominently display the rights associated with each token. Only then can we begin to protect consumers from the uncertainties currently inherent in this market and build a sustainable future for digital assets.
The time to act is now: without swift action, government regulation may step in to protect consumers—whether the NFT industry is ready or not.
