An interview with Viktor Feťko, a crypto-asset expert at the law firm Hronček & Partners, s. r. o. Viktor is one of the leaders of the AllAboutNFT project, and you would be hard-pressed to find a similar concept on the market. This asset (NFT) is gaining increasing significance amid the growing popularity of blockchain technologies and cryptocurrencies, not only for investors and collectors but also for content creators. How can artists benefit from this, and what do they need to consider if they want to use NFTs to finance their projects? Find out more in the interview.
Hi Viktor, we’re glad you found time for us despite your busy schedule. We hope you’re ready for our questions.
First question... What do NFTs offer us?
There are different perspectives on NFTs. Some people perceive them—or imagine them—as a specific image where they right-click on the image, select “Save As,” and then download the image to their own storage without having to buy it. I respond to such views in the same way as I do to soccer cards or stamps from philatelists, or other such collectors or collectibles. I’ll use Pokémon cards as an example: I can copy each one using a color copier, and just like that, I can have the image in physical form —I’ll put it in a drawer or somewhere I want to keep it and essentially do what a stamp collector does with a postage stamp or a soccer card collector does with soccer cards. So it’s not about NFTs allowing someone to exclusively possess digital content that others cannot perceive with their senses. It’s more about someone having a property right. However, this is a legal question for a separate debate: whether a property right can entail some special right pertaining only to a specific type of digital content, which actually opens up a new set of legal relationships and a new set of social relationships —in non-legal terms, the question of ownership of any digital content. This is something that, until recently, wasn’t all that popular, even though the concept has existed for many years. Back then, the market wasn’t as saturated with distributed transaction database technology and NFTs as assets, but now, in a short period of time, with the popularization of blockchain, DLT (Distributed Ledger Technology), and NFTs themselves, it has gained more awareness and has a greater impact. Consequently, it grants certain rights to a digital asset, where greater recognition by a larger number of people translates to greater value. So I see it as a new type of asset, a newly expanded category of assets that allows us to hold rights to digital assets that were previously impossible to own.
You’re interested in NFTs, crypto, and blockchain technology in general—an area you’ve been exploring both personally and professionally—which is why your law firm launched the AllAboutNFT project. What kind of project is this? What is its purpose?
As I said, NFTs have been around for some time. Generally speaking, blockchain technology is almost as old as I am, but it has only become widespread in recent years, and awareness is beginning to grow about the existence of NFTs and what they roughly entail. Thanks to NFTs, a wide range of legal relationships is opening up that could not be realized before NFTs entered the market, and thus opportunities are opening up for a large group of people. Most often, these are content creators who can monetize their work by issuing NFTs, which can serve as a source of income. For example, a musician earns income from CD/vinyl sales, which represents very little to minimal revenue; they also earn income from streaming platforms, income from concerts, income from merchandise, or from such items, and more recently, they may also have income from NFT sales. If a content creator decides to distribute their content by making it available through a streaming platform, the terms are clear. They accept the platform’s general terms and conditions, and that’s how they generate income. If I want to sell merch, it’s straightforward: I have T-shirts or hoodies made, sell them on a website under certain terms, and get paid for it. But if someone wants to issue an NFT, there are a large number of aspects that need to be addressed—from technical aspects, such as how to issue an NFT, how I can issue an NFT, on which platform it’s best to monetize it, how I’ll tax income from this NFT, what legal status it has, and so on. So there is this interdisciplinary overlap of questions that remains unanswered in the public sphere, and NFT issuers lack sufficient information to fully leverage NFTs. The purpose of the AllAboutNFT project is precisely to provide answers in each of these necessary areas so that anyone interested in the Visegrad Four countries, or the European Union, can issue and monetize NFTs to support their creative work, has all the answers they need in one place.
From this perspective, what can a law firm offer?
As I mentioned, legal issues are just one of the many questions that must be addressed when creating, issuing, and selling NFTs. There are several interesting questions here. If I may highlight a few key points, for example, in the case of the Slovak Republic, cryptoassets and NFTs are not considered tangible property. The same applies to Poland, the Netherlands, and the Russian Federation. In the rest of Europe, cryptoassets are considered intangible property. Even things in quotation marks—“intangible”—are still “things” in the legal sense. For example, such a minor distinction has far-reaching consequences, meaning we can now discuss whether I can enter into a purchase agreement. Or, more precisely, whether I can fulfill the elements of the offense for any of the criminal offenses that require the subject of the offense to be a “thing,” since a cryptoasset is not a “thing.” Another issue involves regulatory questions. We know that cryptoassets are closely tied to the financial market. NFTs are moving slightly away from this market, but they are still very closely linked to financial market regulations, and the question now is whether any activities related to NFTs meet the criteria for a regulated activity in the financial market. This raises a multitude of questions. Intellectual property is a separate category of legal issues that issuers and other parties monetizing NFTs must address if they want to ensure everything is in order. However, be careful not to imply that these are clear-cut answers; for many of these questions, there are none, and therefore a broad legal perspective is necessary in this area. For example, if a problem arises during the sale of merchandise, at a concert, or with any other source of income for a content creator, the answers are relatively clear. They can be found online, so there’s no need to hire a law firm—even someone without a legal background can find answers to their specific legal issues. Because many, many aspects of cryptoassets and NFTs are not specifically regulated, and because NFTs introduce a new type of legal relationship that the legislature did not anticipate, there are many gaps in legislation and judicial precedent. To resolve these correctly, one needs a broader legal perspective—something the internet alone cannot provide. A lawyer who does not have the same breadth of legal perspective and scope as our law firm—unless they are a recognized expert in this field—will not be able to provide comprehensive answers to various questions, and that is the main reason and benefit that our law firm offers and can provide regarding NFTs and specifically the AllAboutNFT project.
You mentioned several things that the market is not yet familiar with, meaning it is still searching for answers to them. In standard legal practice, there are usually already precedents, judicial practice, or specific legal regulations where you can find answers to these issues. From what I know and have observed, NFTs are currently in that gray area. How often do you encounter cases where those answers aren’t there?
Yes, the question is apparently whether I often encounter cases in practice where legal practice doesn’t provide sufficient answers. Every lawyer probably encounters such cases, and under the Slovak Civil Code—which I consider more concise and which already has its share of flaws—such cases arise frequently, even in relatively simple matters. We may be dealing with a neighborly dispute involving any basic civil law issue, yet there will be a situation arising from a particular set of circumstances for which neither the law nor judicial practice provides an answer. This is common legal practice in Slovakia and in most countries around the world, but of course there are areas where such gaps are significantly broader. Several of these areas fall within the scope of our law firm’s expertise; we encounter them relatively often. When clients come to us with a business-related question—and they often have an innovative idea, planning to do something in a new way or through a new business model—this can give rise to various new types of relationships that the legislature did not anticipate, and thus are not covered by existing legislation; we are here to resolve these issues properly. We must have an interdisciplinary perspective within the law across multiple legal fields to ensure that that some other legal regulation might conflict with this new form of business or some innovative approach—or indeed any innovative activity—and that this activity might run counter to some of its provisions.
So yes, this happens to us quite often in practice, and this is precisely our role and, I would say, one of our strengths. We often deal with precisely such issues that have not been addressed before, and without the broad scope that our law firm possesses, it would not even be possible to address them.
In that case, in which areas of law do such situations arise most frequently?
We can highlight several areas. We focus on medical and pharmaceutical law, but financial market law—particularly with the spread of blockchain technology—is giving rise to new legal relationships that have not been addressed, and the legal framework does not provide answers—in some EU member states it does, in others it does not. If an activity is regulated at the national level, it is usually regulated differently, and the European legislator responds to this. In the coming days, the final, valid text of the Regulation on Markets in Crypto-Assets will be published; this is a regulation that governs any activities related to crypto-assets. A specific issue now is how NFTs are classified as crypto-assets under this regulation and what the exceptions are—specifically, when an NFT falls under this regulation and when it does not. In the event that an NFT does not fall under the scope of this regulation on crypto-asset markets (MiCA for short), what is its status, and how is it treated? These are all questions to which we will provide answers as part of our project. This is precisely the area where we most frequently encounter situations that the legislator could not have foreseen, because this aspect did not yet exist in society, and we, as a law firm, have to deal with it.
Thank you very much for the interview, and we wish you every success.
You can read about the entire AllAboutNFT project at allaboutnft.eu
