World qualifiers and the Winter Olympics are coming: talk about compliance issues faced by NFT+ sports

Although under the epidemic situation, the global depressive atmosphere of the World Cup qualifiers and the Winter Olympics has also been swept away. There are precedents for NFT galloping the Tokyo Olympics and launching the British national team store. We seem to be able to look forward to the NFT next time. Shines in the sporting event of China.

NFT is a unique digital asset based on the blockchain network, providing unique tangible or intangible items, such as virtual paintings, digital music albums or sports collections. The NFT project is unique and contains various information that can be easily retrieved in the blockchain network, so it is not interchangeable.

NFT is not uncommon in the sports field. The well-known blockchain company Dapper Labs has cooperated with the largest NBA basketball league to establish a well-known sports-related NFT application and has so far obtained hundreds of millions of dollars in sales. In terms of football, the famous NFT project Sorare cooperates with more than 100 world-renowned football clubs, including players from Bayern Munich, Liverpool, Real Madrid and the MLS Players Association. These players will be brought to the platform through a license agreement. Participants can not only buy and sell digital players. Tickets, you can also form a team, through the football fantasy league to get rewards based on actual performance. With the help of the World Cup and the Olympic Games, combined with the successful experience in the front, it is not ruled out that the NFT can make a big difference, but the top priority is to solve the NFT compliance risk.

1. Tournament authorization

The issuance of sports NFTs related to sports events first needs to obtain the necessary authorization from the event organizer, the organization where the athletes are located, or other rights parties. After the authorization of the corresponding rights holders, the NFT provider can then cast and sell. Among them, the authorizations that may be involved include, but are not limited to, the live broadcast of the event, the right to broadcast, and the right of information network dissemination of TV programs related to the event, etc.

Take the NFT involving event videos as an example. If the NFT provider records a game by itself and then intercepts part of the video and casts the NFT for sale, it should consider whether it needs to obtain the authorization of the event organizer; if the event program video produced by other authors is used, then You should consider whether you need to obtain the author’s authorization, otherwise it may constitute an infringement. In September 2020, the Beijing Higher People’s Court pronounced the “CCTV Network Infringement Retrial Case” ((2020) Jingmin Zai No.127). In this case, CCTV obtained the authorization of the International Football Federation to exclusively enjoy the 2014 World Cup in Brazil. Broadcast rights in Mandarin and Cantonese in Mainland China, broadcast in real time in Mainland China and provided 64 games of the 2014 World Cup via the Internet after the game; Baofeng Company intercepted the CCTV game screen and posted it on its website without the authorization of CCTV Play. The court held that Baofeng’s actions involved infringed the information network dissemination rights enjoyed by CCTV over the events and programs involved in the case. Although the case is not directly directed against NFT, it also provides reference for the use of sports event videos to avoid infringement.

2. Athlete authorization

Under the national sports trend, the value of athletes is not only embodied in the aspect of competition, but the image rights of athletes also have great commercial value. Generally speaking, athletes’ portrait rights are owned by individuals, but China is a bit special in this regard. The State Sports General Administration of China once stipulated that “the portrait rights of national athletes and other intangible assets belong to the state”. For details, please refer to Yao Ming v. Coca-Cola A case. Regardless of the disputes over the ownership of rights, when casting NFTs, there are also situations where athletes’ portrait rights need to be used, which requires authorization, whether it is individual authorization or collective authorization, in short, it is necessary to obtain portrait rights. For example, NBA Topshot is an NFT digital collection that saves and digitizes the “moment” of the athletes on the field. Each NFT keeps the record of the athlete himself on the field. This means that the image of the athlete will be valued, and the question that follows is whether the athlete’s authorization is required for the casting of NFT?

Take NBA Topshot as an example. The NBA directly owns the IP of each team. When a player signs a contract with the team, the right to use the player’s image has been authorized to the NBA official, and then the official NBA transfers the right to use the player’s image to others. Operation. In 2011, the NBA signed an exclusive licensing contract with PANINI [6]. The production of star cards by PANINI has caused a wave of collections. And the “Highlight Moment” product launched this time is also officially authorized by the NBA to conduct NFT casting by Dapper Labs.

3. Tax issues

Not only the NFT, but also the taxable issue of virtual currencies has a long history. With the expansion of the market value of virtual currencies, this issue has attracted widespread attention from countries all over the world. Many countries have also established special taxation regulatory policies. For example, Germany is the first country to tax virtual assets, and the United States is a country with relatively complete taxation.

Taking the United States as an example, the Internal Revenue Service (hereinafter referred to as “IRS”) regards virtual currencies such as Bitcoin as property and stipulates that the use of virtual currencies to pay is applicable to the general taxation principles of other goods transactions. In 2018, the IRS reminded taxpayers again that cryptocurrency transactions should be taxable like other forms of property. Failure to file tax returns may not only be liable for fines and interest, but may even be subject to criminal prosecution. Anyone convicted of tax evasion can face up to five years in prison and a fine of $250,000.

4. NFT legality issues

On the eve of the Tokyo Olympics, the International Olympic Committee announced that nWay, a subsidiary of Animoca Brands, has been officially authorized by the International Olympic Committee to release Olympic NFT Pins (NFT Olympic badges), which will be distributed and sold on, but this is only for Japan. Word. At present, Qatar, as the host of the World Cup, has also indicated that it supports blockchain technology to enter the World Cup, but the host of the Winter Olympics is relatively pessimistic about the NFT. At 5:00 pm on September 24, 2021, the People’s Bank of China issued the “Central Cyberspace Administration of the People’s Bank of China, the Supreme People’s Court, the Supreme People’s “Notice on the Risks of Speculation in Currency Trading (Yinfa [2021] No. 237)” (hereinafter referred to as the “924 Notice”), there are no exceptions for any currency. If sports NFT trading activities are suspected of hyping the issuance and trading of virtual currencies, they will be punished.

Of course, it is impossible for NFTs to be regarded as virtual goods, but in terms of current judicial trends, it is difficult for NFTs to be protected by law in China.

China is entering a stage of strict supervision of virtual currencies, and it is recommended to avoid stepping on the red line. The NFT itself is also a highly speculative asset. Some people can earn thousands or millions of dollars by selling NFTs, but they may also make buyers bankrupt and buy them but ultimately they are worthless. You still need to be cautious in participating.

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