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Legal Aspects of NFTs that Should Not Be Overlooked

Advancements in the blockchain technology are happening at a fast pace, while lawmakers and regulators take longer to establish their oversight policies. The Nft technology for one, was devised only in 2021 by British scientist Sir Tim Berners-Lee, and has been making headway in the blockchain industry as a lucrative source of newfound wealth. However, everything has been happening so fast the UK Law Commission is still in the process of threshing out potential legal issues to ensure that NFT transactions work within the boundaries of English laws.

What Inspired the Development of NFT Technology?

Sir Tim Berners-Lee, invented the Nft technology, as a means by which ownership of digital assets can be established via a blockchain platform so it can be monetized. However, the principle behind the financial value of an NFT is that it is not tied to a price index. Mainly because of the digital asset’s non-fungible nature, which means it cannot be easily interchanged or exchanged for another asset in light of its intrinsic value. That is why NFTs are put up for sale in auction houses, where there are buyers willing to pay any price in order to acquire ownership of a digital masterpiece.

Months after the British scientist’s NFT technology was introduced in the Ethereum platform, he was able to sell the source code of his WWW invention at Sotheby’s for $5.4 million. Thereafter, other creators or established owners of digital assets had their works tokenized as a non-fungible asset via the Ethereum blockchain platform.

Apparently, there is a market for NFTs, as many took to selling NFTs in exchange for millions worth of cryptocurrencies. Sometime in March, graphic designer and digital artist Mike Winkelmann, who goes by the name of Beeple in the art world, made record for selling the highest priced NFT. Beeple sold his NFT “Everydays – The First 5000 Days,” to cryptocurrency mogul Vignesh Sundaresan, for a whopping price of $69 million.

However, law experts warn there are legal considerations that must not be overlooked when dealing with this type of blockchain transaction. Currently, the UK Law Commission is looking into the following matters:

Claim of Ownership

Anyone can claim ownership of a digital asset by affixing a token to it regardless of whether the claimant is the creator. The blockchain platform even if publicly available, does not require claimants to use their true identities when converting a digital asset into an NFT.

NFT Ownership Can be Challenged

While some buyers of goods require proof of ownership to make sure the seller has legal right to sell the asset, many believe that NFT conversion serves as a good enough proof of ownership. Still, if ever another person discovers that his original creation was converted into an NFT that was later auctioned off, that person can take legal action to reclaim ownership from whoever is the current owner of his work.

NFT Proof of Ownership is Not a Copyright Equivalent

Establishing ownership by converting a digital asset into an NFT does not deliver the same rights afforded by a copyright. What is owned is the key to a code that entitles you to link the digital asset to a blockchain transaction. As mentioned earlier, a claim of an NFT owner to a specific digital asset can still be challenged.

Enforcement of Conditions and Stipulations Requires Use of Same Blockchain Platform

Some NFTs include information that give the first owner the right to receive a specific amount as royalty every time the NFT changes ownership. However such special privilege can be enforced only in the blockchain platform where the NFT originated.

Changes in Alcohol Control Laws : Will Overall Results Justify the Means?

The temporary changes in alcohol laws in some states yielded tremendous increases in sales; albeit denoting that alcohol consumption is also on an upward trend.

The buzz going around is that the changes are likely to remain permanent. Mainly because the economic benefits yielded by the direct sale of alcoholic beverages to consumers, will help local governments support their respective communities amidst the recession. Yet at the end of the day, and after the overall impact have been evaluated, will the final results justify the means?

Alcohol beverage control laws in the U.S. have always been criticized as more focused on regulating markets and ensuring collection of taxes. The contention is that by making alcoholic beverages costly, there will be fewer cases of alcoholism.

When the realities of the COVID-19 pandemic forced governments to shut down bars and restaurants, lawmakers also saw the need to relax laws; specifically, the restrictions related to the direct sale of alcoholic beverages to consumers. Traditional liquor stores, bars, pubs and restaurants were given permission to provide bottled-services and to-go cocktail drinks directly to consumers by way of alcohol delivery services.

Except in the states of Pennsylvania, Alabama, Oklahoma and Utah, alcohol control laws in several states were relaxed to help liquor stores, bars and restaurants generate revenues. In turn, such revenues will bring in large amounts of taxes that state governments badly need to support the people in their communities. Actually, the relaxation of alcohol sales laws had more than helped the alcohol selling business stay afloat.

Nielsen Reports Attest to Growth of Alcohol Sales

According to data gatherer Nielsen, the total alcohol drinks sold off-premises throughout the country, had in fact boosted tremendous growth in sales. Overall sales of spirits contributed 34.1 percent increase, wine by 30.1 percent and beer by 12.6 percent. Comparisons were made against the figures reported in 2019 for the same period as of May 02, 2020.

Now what does this indicate? It means regardless of costs, the relaxation of laws also spurred increases in alcohol consumption.

Dr George Koob, Director of the National Abuse of Alcohol Abuse and Alcoholism (NIAAA)It’s said that increases are commonly seen in times of disaster. However, inasmuch as the move to temporarily lift laws aimed at controlling the sale and availability of alcohol, yielded notable economic results, there is now a likely possibility that the changes will stay for good

Last April, when Texas Gov. Greg Abbott tweeted his announcement of the extension of relaxed alcohol control rules, he had also implied that the changes might become permanent. According to the governor, many in Texas support the new law in alcohol procurement.

Why EU Food Safety Laws Make a Difference among European Coffee Makers and Consumers

Statistical reports about consumer commodities reveal that on a global scale, coffee is the most consumed beverage. The estimate is that coffee is consumed worldwide at a rate of 42.6 liters per person each year. The information is further broken down to 30 liters for instant coffee and 12.6 liters for roast coffee.

An added value that boosted sale of coffee products is the full-body experience associated with drinking coffee. The concept is based on levels of caffeination, subsequently resulting to premiumization of different coffee products.

In the European markets, the coffee business is largely regulated by sustainability policies. It is not enough for a business to offer quality ready-to-drink coffee, or the best tasting specialty coffee. Sustainability of methods used from point of production to preparation of coffee beverages or products, must remain as the topmost priority.

The demand for certification of sustainability in coffee products, all the more bolstered the demand for coffee beverage among European consumers, particularly the Millennials. The requirement is in addition to compliance with traceability and transparency, before coffee bean producers can enter into trade agreements with the best coffee roasters in Europe.

Examples of EU Laws and Policies that Must Be Observed by Exporters Looking to Trade Their Coffee Beans or Products in the European Markets

The General Food Law specifically EC Regulation 178/2002, provides the legislative framework in ensuring food safety. This EU law maintains that all food products sold for consumption in EU member countries must be traceable across the entire supply chain as a means of guaranteeing food safety. Traceability of food products will permit taking appropriate actions against the right entity in matters involving unsafe food as a means of limiting known risks of food contamination.

Hazard Analysis Critical Control Points (HACCP) in Food Management

The HACCP is an internationally recognized system of identifying risks related to food safety, including methods prescribed in managing such risks. Determining food safety risks is conducted by way of analyzing and controlling chemical, physical and biological hazards associated with the food production; from point of raw material production, handling and procurement to the manufacturing, distribution and consumption stages. An HACCP certification therefore, gives EU consumers peace of mind that the food product is safe.

EU’s Law on Maximum Residue Levels (MRLs)

This EU legislation pertains to the presence of pesticides in food products, which border authorities tout as the most common reason why certain coffee beans coming from non-EU member countries are rejected.

 

The Maximum Residue Levels (MRLs) Law  establishes the safety levels of pesticides found present in food products that will be introduced in EU markets for human consumption. Any product possessing more pesticides than what the MRLs have established as safe will be pulled from the market even if they passed border inspection.

In contrast to the U.S. coffee market, the industry can easily be swayed by unfounded speculations about coffee consumption. In mid  2019, the Internet was flooded with information about coffee and its link to cancer. This even prompted the government of California to require coffee-serving establishments to put up notification that coffee can cause cancer.

It was only when the International Agency for Research on Cancer (IARC) released their report that required notifications were brought down, much to the relief of sellers and consumers alike. The IARC said that after conducting reviews of more than 1,000  studies, there was not enough evidence to support claims that coffee is a cancer-causing agent.

As an aside, coffee drinkers currently looking for the best coffee makers available online can get good insight from https://ourcoffeebarn.com/gear/best-coffee-makers/

Startup Entrepreneurs : Running a Business is More than Just Having a Passion for Your Product or Service

Startup entrepreneurs may have started their business for the right reason, of having the passion for creating a product; or of offering a service that they believe can fill a void in the marketplace.

However, there are challenges they need to face once they are in the thick of things in the business world. Proper management of finances, control over procurement activities, marketing and selling to the right audience. In today’s business environment, startup business owners must conform with the times by conducting market research and analysis of customer data in order to thrive and survive.

Otherwise, they are likely to count as among the 20% of startup enterprises that folded during the first year of operation, which the Small Business Administration (SMBA) reported in its 2019 statistics. Time and again, the SMBA has stressed the importance of having a business plan not only for purposes of satisfying a loan documentation requirement, but also as fundamental guide when running a business.

There are free business plan samples and templates available online; but simply modifying a sample just for show, and not to serve its fundamental purpose, will eventually prove to be bad for the startup business, especially during the first year. Mainly because business plans to be really effective, must be close to what is real and must be founded on verified information.

What most professional business plan writers do in order to achieve a realistic plan is to conduct analyses, not only of the market but also of the competition. They gather current and accurate data about the financial needs of the business so they can make educated projections and forecasts.

Another aspect assessed by seasoned business plan writers are the potential problems that a business could face. This is important because they need to have viable solutions in place in case potential problems become a reality.

Since our main topic is about law, we will mention some government laws that would impact a business, in case there are related pending legislations that will affect the status quo.

Examples of Government Laws that Can Impact Businesses with the Passing of New Legislations

The Federal Tax Code

The Federal Tax Code is often the subject of amendments, revisions or additions. They can be changes that will affect Income Tax and its related Estimated Tax, or Employment Tax that includes employer’s contributions for Social Security, Medicare and Unemployment Tax; or Excise Tax, which the IRS simply explains as the tax included in the price of a product or service.

Labor Laws

Changes in labor laws could cover employment regulations over working hours and wages including overtime pay. There are also labor laws that promulgate equal opportunity, employees leaves, pension and welfare benefits, as well as workplace health and safety, Some labor laws also govern work arrangements entered with independent contractors.

The Affordable Care Act

Small businesses with less than 50 full-time employees are not included in the mandate to provide employees with health care insurance coverage. However, those mandated to do so can also qualify for the Small Business Health Care Tax Credit. Any amendments to this Act can affect both large and small businesses.

A Quick Overview of Important FTC Guidelines for Influencer Marketing Schemes

Since 2017, the Federal Trade Commission (FTC), the government agency tasked with enforcing federal legislations on promotions and advertising, showed awareness over the rise of influencers being used as tools by product advertisers.

The FTC took notice that advertising departments and agencies of brand advertisers named these social media bloggers as influencers. Mainly because as their audience engaged and grew in considerable numbers, they also demonstrated the ability to convert follower engagements into actual sales.

The next step of action was for the FTC to issue a directive instructing influencers and advertisers alike, to apply the same set of rules governing all other types of advertisinge, — including incorporating statements that disclose whether a blogger is being compensated for promoting a brand.

According to Michael Atleson, a staff attorney of the FTC Bureau of Consumer Protection,

“Many consumers now make buying decisions based on influencer recommendations, and they should know when a product brand, paid an influencer for an endorsement, as it affects the credibility and weight given by consumers on those endorsements”

What Must be Included in the Influencer Disclosure Statement as Required by the FTC?

The FTC asserts that if an influencer receives payment for endorsing a product on social media, such endorsement will be considered as misleading if the influencer will not disclose that he or she receives compensation for doing so. The rationale behind the disclosure is that the audience puts more weight on recommendations that were given voluntarily, with no material connection whatsoever, between blogger and the brand being advertised.

What is “Material Connection?”

“Material Connection” is legally defined as any binding relationship materially affecting the credibility or weight of any kind of endorsement, and not reasonably expected by consumers.

Under the FTC guidelines, “Material Connection” includes compensation by way of free products, paid-for trip, free service, special discounts, free upgrade, special invitation to any event, and/or stock ownership. In addition, employment and/or being related to an employee, as well as an outright business relationship also comprise “Material Connection”.

What is the FTC’s Take on Paid Followers of Influencers?

Inasmuch as Influencer Marketing schemes require a social media blogger to meet a certain number of followers before they can qualify as influencer, it has become a common practice for start-up bloggers to “buy” followers or subscribers.

Buying followers in the social media marketing world – SMM World – is recommended only as a means of boosting appearances and not as part of the brand endorsement scheme. In fact, social media marketers offering this type of service, do not warrant its efficiency or will not take liability for any negative outcome.

FTC Bureau of Consumer Protection lawyer, Michael Atleson explained that the FTC Influencer Marketing guidelines concern advertisements and promotions using the services of social media bloggers as product influencers. Any issue related to the practice of buying followers is between the brand advertiser and the influencer.

It is the responsibility of brand advertisers therefore to inform, impose and ensure that the guidelines governing influencer contracts are being followed or observed.

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