NFTs In Crisis And Insolvency

NFTs are a hot topic, but their treatment under insolvency law – which will receive more attention due to the recent crisis – has not yet been explored in much detail. This contribution aims to provide a brief overview of the most relevant issues.

NFTs as collateral

A non-fungible token (NFT) is a data record stored on the blockchain under a specific address (smart contract address) that consists of a number (token ID) that is assigned to the address (public key) of its owner. This makes the token unique and uniquely identifiable, and thus non-fungible. In addition, tokens also contain further information, such as a unique link to an external decentralised file system, where, for example, the actual digital artwork is stored. The NFT therefore contains information that refers to the artist, the title and the storage location.