Thais Cordero
Lawyer at Marcos Martins Advogados
Digital transformation in the corporate world has been immensely favored by the pandemic. In the financial market, its decentralization through the emergence of new investment sources has been strongly catalyzed – representing a new scenario that, however much uncertainty and risk it brings, also opens doors to new and completely promising proposals for organizational prominence. Among the many options emerging, NFT investments are certainly attracting the attention of major market players.
The search for investors has always been a strategic action for businesses. With the globalization of markets, three actions have become popular in this task: securities lending – such as stock exchanges and commercial promissory notes; debt securities, which includes direct capitalization through the acquisition of company shares; and those with less active participation, but greater privileges, such as the right to veto internal decisions.
Many of them, to this day, are strongly present and valued by countless entrepreneurs. However, with the advent and popularization of the cryptoassets market, alternative investments have been attracting the attention of the market – especially with the new paths opened up by the NFT (non-fungible token).
Unlike e-currencies, non-fungible tokens have made a global splash by making it possible to acquire the authentication of a digital file. Their use, at least in the beginning, was strictly linked to obtaining an exclusive item – impossible to replace with others of the same kind. In 2021, this market was worth around 25 billion dollars, according to a report by DappRadar. In 2020, the total recorded was just 94.9 million dollars.
In the investment market, these assets are characterized, in particular, by their lack of relational value and trading capacity. To this end, there have been many cases of companies wishing to enter into this model creating a core of revenue unrelated to their corporate purpose – developing tokens that can be offered for sale, with the possibility of direct conversion to their cash flow. In other investment options, the amont acquired is directed towards the organization’s profit, not its share capital.
The advantages of NFT for the capitalization of companies are enormous – allowing, above all, transactional investments in agile time and high volume. However, major challenges surround this option. In tax terms, these tokens are exempt from any taxes commonly applied in the investor market – a fact which, although beneficial at first glance, can lead to mass correlational issuance and high risks of inflation by a means outside the financial mainstream.
Its lack of direct identification also brings greater legal uncertainty to the market – a characteristic which, combined with its regulatory nature independent of the Central Bank, increases the circulation of a worthless currency that is extremely susceptible to risks of economic imbalance. Not to mention the openings for fraud and crime arising from the lack of control over its administration.
Any commercial relationship involving cryptoassets has an impact on legal certainty in this area, especially in the case of NFTs, where the breadth of blockchains for tracking and receiving information opens the door to greater chances of loss of control and, consequently, risks of data leaks and losses.
The dangers are undeniable, as are the advantages when applied correctly. Therefore, it is essential that such NFT-based operations require adequate regulation, preventing the spread of markets that are marginal to the regulatory concept. Only then will these movements have the legitimacy and strength to prosper and attract more and more investors.
Thais Cordero is a lawyer and head of the corporate area at Marcos Martins Advogados.
