Singapore High Court finds that Non-Fungible Tokens (“NFTs”) can be considered “property”
What are NFTs?
An NFT is a unit of information recorded on a blockchain. NFTs are unique instances, and every token has a unique identification number for easy differentiation from other tokens in the same smart contract for that token. An NFT can be used to “tokenise” a digital file to produce a digital certificate of ownership that is stored on the distributed ledger which can subsequently be bought and sold.
Janesh s/o Rajkumar v Unknown Person [2022] SGHC 264 (“Janesh s/o Rajkumar”)
In Janesh s/o Rajkumar, the Singapore High Court found that NFTs can be considered “property”.
Background of the case
In Janesh s/o Rajkumar, the claimant brought an application for an injunction to restrain the defendant from dealing with his NFT, Bored Ape Yacht Club (“BAYC”) ID #2162. In determining whether to grant the injunction, the Court had to consider whether NFTs in general were capable of giving rise to proprietary rights which could be protected by an injunction.
NFTs as “property”
To determine whether NFTs constitute “property”, the Court applied the test set out in National Provincial Bank v Ainsworth [1965] AC 1175 (“Ainsworth”), namely that it must be “definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability”.
The Court found that NFTs satisfied the Ainsworth test, given that:
- NFTs are “definable” in that they are “capable of being isolated from other assets whether of the same type or of other types and thereby identified” as metadata, which is central to an NFT, distinguishes on NFT from another;
- An NFT has an “owner being capable of being recognised as such by third parties” as the presumptive owner of an NFT would be whoever controls the wallet which is linked to the NFT. Excludability is also achieved as one cannot deal with an NFT without the private owner’s key;
- NFT’s rights are also “capable of assumption by third parties”. The NFT owner’s exclusive ability to transfer the NFT to another party underscores the “right” of the owner. Further, NFTs are the subject of active trading in the markets; and
- The NFT has “some degree of permanence or stability”. The Court found that the NFT concerned, BAYC, has as much permanence and stability as money in bank accounts which, these days, exist mainly in the form of ledger entries and not cold hard cash.
Accordingly, the Court granted the proprietary injunction sought by the claimant with respect to his BAYC.
IMPORTANT NOTICE: This article is only intended as a guide and does not purport to be an exhaustive or conclusive discussion of the matters set out herein and should not be relied on as a substitute for definitive legal advice. Reference should always be made to the applicable statutes, the relevant subsidiary legislations and other applicable guidelines. This memorandum is not to be transmitted to any other person nor is it to be relied upon by any other person or for any other purpose or quoted or referred to in any public document or filed with any governmental or other authorities without our consent in writing. This memorandum is limited to the laws of Singapore. In issuing this memorandum, we do not assume any obligation to notify or inform you of any developments subsequent to its date that might render its contents untrue or inaccurate in whole or in part at such later time. If you would like to discuss the implications of these legal developments on your business or obtain advice, please do not hesitate to approach your usual contact at Insights Law LLC or you may direct the inquiry to our key contacts stated above.
重要提示：本文章仅用于参考，并不视作对本文所载事项的详尽或结论性的讨论，且不应被依赖作为替代明确的法律意见。应参考所适用的法规、有关附属法例、及其他适用的原则。未经本所书面同意，本备忘录不得向任何其他人传送，任何人也不得就任何目的依赖本备忘录，并于任何公共文件引述或专署，或提交给任何政府或有关当局。本备忘录仅限于新加坡的法律。本所就这份备忘录的发行，对较后时间日期发生的任何进展导致本备忘录所呈现的全部或部分不实或不准确的内容不承担任何义务。如果您想了解这些法律发展对您业务的影响或咨询意见，请随时与您智诚法律（新加坡）的联系人联系，或直接联系上述的主要联系人。
