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Non-fungible tokens, or NFTs, are widely used in Argentina. Here the Puente de la Mujer bridge in capital Buenos Aires. (Photo: Buenos Aires Tourism Agency).
Wednesday, February 15, 2023

NFTs in South America: The Legal Framework

Non-fungible tokens
in Argentina, Brazil, Chile an Colombia.

DLA Piper

Non-Fungible Tokens, the NFTs, have become one of the most popular assets globally. Developed as collectable assets which have its authenticity guaranteed by blockchain, the NFTs create a new market to acquire original digital pieces. 

NFTs have received increased attention in recent years, especially in the trade of digital objects with collector value. Among other things, NFTs offer the possibility of monetizing digital art and creating "originals" comparable to physical works. In addition, smart contracts anchored by blockchain technology give the author of a work the opportunity to automatically receive royalties whenever the NFT representing the work is sold.

Legally, however, the treatment of NFTs remains uncertain and in many respects unregulated. Moreover, determining the applicable law to NFTs is often difficult.

Here is an overview of NFT regulations in Argentina, Brazil, Chile and Colombia.


Non-fungible tokens, or NFTs, are widely used in Argentina. As in other countries, NFTs exist and are the subject matter of use and transactions by means of blockchain mechanisms.

There is no specific legislation or legal framework for NFTs. They have evolved in the context of “traditional” legal concepts, adapted to contemporary technologies.

In spite of their widespread use, NFTs create significant legal issues and uncertainties as to their jural status. Some of these issues will be examined in the following paragraphs.

NFTs as assets.

In current legal practice, NFTs are frequently referred to as “assets”. It is not clear, however, what type of asset an NFT is. Part of the uncertainty in this respect is that NFTs imply two different types of property rights. From one angle, they may be protected by intellectual property rights; this will be examined in the following sections. From a second perspective, like other crypto-assets, they imply a right similar to a creditor’s or personal right derived from the blockchain mechanism in the context of which the NFT exists.

This dual status is similar to the one present in connection with other intellectual property right. Ownership of copyright on a book should be distinguished from ownership of a tangible volume. NFTs may be protected by intellectual property rights that should be distinguished from the rights that may exist as to a specific materialization of the protected intellectual creation within a blockchain system.

Even after this distinction is made, the status of NFTs as assets within blockchain systems is uncertain. There is no legislation on such matter and it is not clear what remedies are available in case these hypothetical rights within a blockchain system are negated or deviated, e.g. by hackers or due to malfunctions of the relevant systems.

NFTs and copyright.

The Argentine Copyright Law (Law 11, 723, as amended, hereinafter “ACL”) includes no express provisions on NFTs. However, it is clearly established that copyright protection extends to all types of intellectual creations, even if they are not listed as such in the ACL. For an intellectual creation to exist and be protected by copyright it must have an element of novelty and personal creativity, and these requirements would extend to the subject matter of NFTs. The relevant intellectual creation may be part of the visual arts or have any other possible intellectual content.

Except for Argentine nationals, copyright protection becomes immediately effective -without registration requirements- with the creation of an intellectual work. Protection of Argentine nationals’ copyright is suspended until the relevant work is registered with the Argentine authorities.

Copyright protection gives exclusive rights as to any reproduction or public distribution of the protected work, in this case that embodied in the NFT. Items that imply an imitation of the protected work are also subject to the exclusive rights of the copyright owner.

NFTs and trademarks.

If an NFT incorporates an image or sign with distinctive qualities, such image or sign may act and be registered as a trademark. In addition, the mere use of the image or sign as a trademark may create a de facto trademark, which is legally protected, although with weaker rights than a registered trademark.

 NFTs may also embody previously registered or protected trademarks.

Although the Trademark Law (Law 22,362 as amended) does not include express provisions on NFTs, its provisions extend to all types of trademarks, regardless of the medium employed for their reproduction or use. Use of signs in an NFT would therefore qualify as trademark use, if such signs identify specific goods or services.

NFTs and unfair competition.

The unauthorized copy or use of NFTs may imply unfair competition, even if such NFT or its contents do not include concepts protected by intellectual property rights such as copyright or trademarks. If such authorized use may create confusion between the user and the original creator or owner of an NFT, or if the user systematically imitates the NFTs of another person, or if the user benefits -without paying a proper consideration- from copying or imitating another person’s NFTs, this may constitute unfair competition, subject to civil liabilities and criminal penalties.

Smart contracts.

The transfer of rights regarding an NFT or the authorization to use or reproduce such NFT may take place by means of smart contracts. However, these contracts do not yet have a definite framework under Argentine law. There use is limited and their effects uncertain.


In Brazil, due to the novelty of the NFTs, the matter is still pending specific legislation. It will be needed to address the commercial relationship’s category between authors, sellers, buyers, and the digital platforms. Moreover, the civil responsibility of the digital platforms in which the NFTs are traded and corresponding regulations and certifications which the platform will have to comply shall be regulated.

Brazil is also yet to address tax implications and financial regulations of such transactions, as the NFT market has a relevant monetary potential with its own particularities.

It is clear that NFTs have been revolutionizing how to buy and sell digital assets which will require the enactment of new laws. And, although, the lack of legislation may create uncertainty as to how this asset will be framed within the legal system, it has not impacted the growing relevance of the NFT market in Brazil. 

In this regard, Brazil has demonstrated a significant interest in NFTs and, currently, is the second largest NFT market in the world, with over 5 million NFT owners in the country, according to the German research company, Statista .

In addition to the high – and still rising – interest in the acquisition of NFT, the development of such assets is beginning to be explored nationally. Besides independent artists, an interesting example is the development of NFT by football clubs to create a new form of income and relationship with its fans and clients.

The experience of providing a unique or limited asset to create a connection between a brand or artist and its fans and clients is proofing to be a new and profiting market tendency, which shall be followed by new laws to regulate the matter.

NFT and Intellectual Property

Although NFTs represent a new and particular digital asset, there has been an effort to understand its place within the existing laws. In this case, the Brazilian Copyright Law No 9,610/1998 and Industrial Property Law No 9.279/96.

Several different types of expressions can be turned into an NFT. However, it has already been established and acknowledged as an important and relevant digital art market with significant amounts of transactions.

Copyright and Trademarks

Despite the lack of express regulation, digital artwork can be protected by the Brazilian Copyright Law No 9,610/1998, as it is the expression of the creation of an author. In this regard, notice that the NFT are the digital and immaterial support in which the artwork is expressed.

Therefore, owning an NFT does not necessarily mean having the ownership of the work or its property rights, which will be regulated by the smart contract. To better illustrate, buying a book do not allow the buyer to reproduce, alter, distribute or economically exploit the work or story within the book, nor necessarily of the NFT.

In Brazil, artists and companies are exploiting this new market. Brazilian company, Havaianas, has partnered with the national artist Adhemas Batista to design an exclusive artwork to be sold as an NFT. This transaction is fundamentally ruled by provisions related to the Brazilian Copyright Law as there is the relationship and assignment of economic rights between the company and the artist as well as the relationship with the buyer of the NFT which shall be ruled by the smart contract.

An additional advantage provided by the blockchain technology, through which the NFT register is encrypted, as it validates the authenticity of the artwork and registers the following transactions and sales. In this scenario, the authenticity registration has been considered an attractive feature as it provides a proof of the development and creation of certain work with corresponding time stamps. It also avoids the possibility of fraud and false authorship claims, which has a positive impact to authors.

The blockchain also can benefit authors as this registry can be consulted and relied upon to the payment of resale rights of 5% upon the work price increase, which cannot be waived, as guaranteed by the Brazilian Copyright Law.

Moreover, NFTs often display trademarks. However, as they are granted protection, as stablished by Industrial Property Law No 9.279/96, its transaction and reproduction must be in compliance with the law.

The unauthorized or unlicensed use of trademarks can be ground to violation and compensatory claims. Therefore, when buying a NFT it is important to assert the ownership of the displayed trademark by the author or developer of the NFT.

An interesting example of the use of trademarks is Clube de Regatas do Flamengo that has developed virtual cards with the time’s players in its uniform with has its trademark featured in an effort to complement the experience in a virtual game platform. In this case, the NFT developer is the owner of the displayed trademarks and it entitled to use and assign in accordance with its interests.

Smart Contracts

The extension of the rights assigned in the purchase of an NFT will be determined by smart contracts, which will regulate the relationship between the author and the interested party.

The analysis of the scope of the agreement must be attended with special attention as it must be aligned with the parties’ interests and what it can actually be assigned, such as property rights, ownership, or license to use the work.

This shall be the terms which can be enforced in a potential claim before a legal court. However, please notice that despite the smart contract provisions, the buyer’s rights will be limited by the local legislation.

In Brazil, the intellectual property limitations may impact the terms of the agreement, as the authors’ moral rights cannot be assigned or waived, in accordance with the Brazilian Copyright Law as well as the resale right, as mentioned previously.


In Chile, the so-called Fintech Law (“Ley Fintech”) now provides particular legal regulations for crypto assets for the first time. Apart from this, it must be examined in each individual case which legal provisions may apply. The following is a brief overview of the areas of law and legal issues that require particular attention when trading NFTs in Chile.

Fintech Law

The “Law that Promotes competition and financial inclusion through innovation and technology in the provision of financial services”, generally referred to as “Fintech Law” was passed by the Chilean Congress on October 12, 2022, and now merely requires the enactment of the Chilean President. It contains explicit regulations for crypto assets, i.e. “digital representations of units of value, goods or services, with the exception of money, regardless of whether it is national currency or foreign exchange, and which can be digitally transferred, stored or exchanged”. This includes not only cryptocurrencies but also NFTs.

In the future the financial supervisory authority CMF will be responsible for supervising the trading of these assets. Providers of so-called alternative transaction systems through which crypto assets are traded furthermore must be included in a register of financial service providers maintained by the CMF and must obtain an authorization from the CMF, which requires compliance with various requirements. In addition, the Fintech Law regulates various information requirements as well as reporting requirements related to money laundering and terrorist financing.

Civil and copyright law

What rights a purchaser of NFTs acquires through them depends fundamentally on the respective agreement with the seller; therefore, the acquisition of NFTs does not necessarily go hand in hand with the acquisition of property rights - intellectual or actual.

In the case of digital works - the main area of utilization of NFTs - actual ownership rights are generally ruled out because these are only provided for physical objects. However, depending on the agreement with the seller, a transfer of usage rights may be considered.

It should be noted that when trading NFTs, there is a fundamental risk that an NFT has been created for a value by persons that are not themselves entitled to dispose of it; the acquisition of usage rights may possibly fail as a result.

Criminal Law

The possibility of unauthorized persons creating NFTs and attempting to trade them, as well as the fact that the value embodied by an NFT is not itself part of the blockchain and therefore may change, deteriorate, or even disappear, also opens the possibility for the commission of numerous fraud and other criminal acts.

In addition, NFT trading - just like the trading of cryptocurrencies - carries the risk of being misused for money laundering, even though this is to be made more difficult by the Fintech Law.

Tax law

In Chile, authors of intellectual property are exempt from paying income tax on gains from the sale of such intellectual property as long as they are not sold to related parties; this will likely also apply to intellectual property traded through NFT.

In contrast, sales of assets traded through NFT that do not constitute intellectual property, or sales by a person that is not the author of the embodied work, are subject to income tax on their capital gains. However, this only applies to natural persons resident in Chile.

Data protection law

The unalterability of the blockchain on which NFTs are based is precisely a uniqueness of the same and has a significant meaning for its security. From a data protection perspective, however, this can be problematic if the data stored in the blockchain contains personal data. According to Chilean data protection law, personal data must be deleted if there is no longer a legal basis for storing it, for example because the consent of the data subject has been revoked, or if they are no longer up-to-date. In addition, the data protection law in Chile gives data subjects the opportunity to request the deletion of their personal data under certain conditions.

However, as blockchain users usually act pseudonymized - and precisely not anonymized - personal data may potentially be stored permanently, without an easy way of deleting the data from the blockchain. For this conflict, there currently seems to be no simple solution that can be applied in everyday life without great technical effort.

Environmental law

Somewhat indirectly, NFT trade may also pose a problem in terms of environmental law. Chile has set itself the goal of being carbon neutral by 2050 and is considered a pioneer in green energy sources and green hydrogen. In this context, the known high electricity consumption in the use of blockchain technologies does not directly lead to a violation of the law and, at first glance, is not something that buyers or traders of NFT must be concerned about; however, in a political context, this may become relevant and thus influence future regulation of the subject.


In Colombia, there are no specific regulations on non-fungible tokens (NFTs).  This means that their use is ruled by Law 23, 1982.

These assets have become attractive, as purchasers acquire a cryptographic token, i.e., a public code, which cannot be replicated and is linked to the original piece. Authors explicitly state that the NFT is the original copy of their work. Notice such an ‘authenticity stamp’ does not automatically transfer copyrights over the NFT; only property rights are transferred.

Transfer of rights

As purchasers do not automatically acquire copyrights, the author may restrict their possibility to reproduce, distribute, translate, adapt, broadcast, or communicate the piece to the public. This limits the purchaser’s possibility of printing the piece (unless they do so for their personal use), creating a phonogram of the same (if it is a song), modifying it, or even displaying it without the author’s permission. Nonetheless, the author and the purchaser may agree that any of these rights be transferred to the latter through a separate agreement.

Notwithstanding the latter, as property rights are transferred, the purchaser can buy, sell, rent, and transfer the NFT itself. Notice that, in the construction of NFTs, all resales are reflected on the blockchain, and royalties can be assigned automatically. In other words, both the author and the latest buyer of the work can charge a percentage of sales that are made in the future.

Under Colombian regulation (particularly, following article 14.2 and 14.3 of the Berne Convention, and article 16 of Decision 351 from the Andean Community), artists should be entitled to receive royalties for the successive sales of their work. This is known as droit de suite. Nonetheless, this right has not been broadly recognized in this country. The sale of NFTs provides authors with the possibility of automatically receiving royalties for their works.

Notice that, under Colombian regulation, moral rights over copyrightable works cannot be waived or transferred.  This means that the creators of the NFT can request, at any given moment, the authorship of the work, and can object to any distortion or modification of the same that may affect its integrity.

Violations of copyrighted works

An NFT is “minted” whenever digital data is converted to crypto collections or digital assets recorded on the blockchain.  Digital works are stored in a distributed ledger or decentralized database and cannot be edited, modified, or deleted.

One of the major issues that creators currently face, is that their works (or derivative works) are minted by third parties, who are not related to them and are not authorized to reproduce, communicate, or use such works.  Platforms do not necessarily block this content, and, furthermore, it is difficult to determine which is the competent jurisdiction to decide on these issues.


Although, in theory, the unauthorized or unlicensed use of intellectual property rights can be ground for compensatory claims, in practice, it is not easy to file such claims in Colombia.

Moreover, internet users can easily reproduce uploaded works. This may reduce the perceived value of the piece for potential purchasers.

Evidence of authorship

Under Colombian regulation, copyright registration before the competent authority (the Dirección Nacional de Derechos de Autor) is not mandatory. Copyrightable works can be protected from the moment of their creation, not from the moment of their registration. Hence, the registration before the Dirección Nacional de Derechos de Autor serves as evidence that the work was created by a certain individual, and, if applicable, that a third party has acquired economic rights over such work.

Although it has not been used as such in Colombia, minted NFTs can be used as evidence that a person is the author of a certain work. This is, as authors register the file in the blockchain, and have a visible time stamp. As such, in case of a dispute, authors could use such registration as evidence that they were the first people to upload such work.

Final thoughts

Although local regulation was not thought out for the protection of digital creators, it may be applied to them.  Notice, nonetheless, that there is a big difficulty in the application of this regulation, as (i) blockchain transactions are anonymous, and (ii) thus, it is difficult to determine who, and where, violated copyright law while minting, or using an NFT without prior authorization.

Even so, NFTs can guarantee artists are paid royalties for their works, thus exercising their droit de suite, and allows them to demonstrate that they are the creators of such works before courts of law.

This overview was written  by Guillermo Cabanellas (Argentina), Paula Mena Barreto and Gisela DeLamare (Brazil), Lisa Hondl (Chile) and María Claudia Martinez (Colombia).

Republished with permission from DLA Piper.


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