Written evidence submitted by Professor Dinusha Mendis, Bournemouth University

Non-Fungible Tokens and the Blockchain

Written evidence submitted by Dinusha Mendis, on behalf of Bournemouth University, to the Department for Digital, Culture, Media and Sport (DCMS) call for evidence into Non-Fungible Tokens (NFTs) and the Blockchain

This evidence is being submitted to highlight the gaps in regulation in relation to NFTs, the potential harms to vulnerable people as a result of NFT speculation and the privacy and security concerns surrounding the blockchain for British investors.

Ownership of NFTs and the value in creating them gives rise to many intellectual property (IP) questions; these are specifically addressed. Furthermore, the evidence presents solutions to the issues noted which the Committee may wish to recommend the Government address.

Dinusha Mendis is Professor of Intellectual Property & Innovation Law and Director of the Centre for Intellectual Property Policy and Management (CIPPM) at Bournemouth University.

Dinusha is an internationally recognised author in relation to new technologies and IP law and has carried out commissioned research for both the UK Government and the European Commission. She has authored articles on NFTs and IP law, has tokenised a Zine titled ‘Demystifying NFTs: From technology to intellectual property’ as an NFT (on OpenSea) and is a member of the Metaverse Governance Team at the World Economic Forum. You can find out more about Dinusha here.

Dinusha is available at the Committee’s disposal, if further clarification is needed on the submission or any of the points raised. Dinusha is happy to clarify such issues either in writing or orally.

Executive Summary

Q1. Is the UK’s light-touch NFT regulation sufficient?

1. No, the light-touch NFT regulation is not sufficient. The current position has led to:

Therefore, at present, the UK’s regulation and also guidance which could apply to NFTs, is not entirely sufficient for the reasons summarised above and detailed below.

2. Much work has been carried out by the Government (and its associated bodies) in relation to the UK’s regulatory approach to crypto-assets from a financial perspective[1]. Also, the UK Jurisdiction Taskforce Report of 2019 set out actions to maintain the UK’s international reputation as a safe and transparent place to do business in financial services; ensure high regulatory standards in financial markets; protect consumers; guard against threats to financial stability and so on.[2]

3. However, to date, steps have not been taken specifically in relation to NFTs to protect against threats such as scamming, piracy and counterfeiting from the point of view of intellectual property (IP) laws and the lack of action could lead to a stream of litigation as has been the case in USA. As set out below, the Government can prepare for and encourage changes which can be brought in through small tweaks to the law.


Q2. What are the potential harms to vulnerable people of NFT speculation?

4. There are a number of harms that NFTs may present. Whilst the harms arising from investment, advertising and finance have been well-documented[5], the risks associated from a lack of understanding of Intellectual Property (IP) laws have not been addressed.

5. Another risk for individuals and the economy affecting both public and private sectors is the scamming of NFTs, leading to consumers and businesses losing millions of pounds. Once again, there has been much focus on this issue from the perspective of the financial sector[8] – but less so, from a property law point of view.

I would strongly recommend that the Government implements this reform to recognise a third type of property law (distinct to things in possession and things in action) as set out by the Law Commission, so that consumers and businesses in the UK are better protected and have clear recourse to compensation.   

Q3. Do Blockchains offer security to British investors?

6. The current law as it exists, does not offer sufficient security to British investors for the reasons outlined below.


Recommendations for Action


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[1] Treasury Committee Consultation 2021, https://www.gov.uk/government/consultations/uk-regulatory-approach-to-cryptoassets-and-stablecoins-consultation-and-call-for-evidence

[2] UK Jurisdiction Taskforce Report 2019, https://www.gov.uk/government/publications/cryptoassets-taskforce

[3] Duncan MacDonald Korth et al, The Art Market 2.0 at https://www.dacs.org.uk/DACSO/media/DACSDocs/Press%20releases/The-Art-Market-2-0-Blockchain-and-Financialisation-in-Visual-Arts-2018.pdf

[4] Case C-128/11 UsedSoft GmbH v Oracle International Corp [2012] ECDR 19; Case C-263/18 Tom Kabinet Internet BV [2019] ECLI:EU:C:2019:1111.

[5] UK Jurisdiction Taskforce Report, 2019; Treasury Committee Consultation 2021; Financial Conduct Authority, 2022.

[6] D. Mendis, When you buy an NFT, you don’t completely own it – here’s why (August 2021) The Conversation at https://theconversation.com/when-you-buy-an-nft-you-dont-completely-own-it-heres-why-166445 See also, D. Mendis, Copyright and NFTs: New Wine in Old Bottles? (2021) World Intellectual Property Review at https://www.worldipreview.com/article/copyright-and-nfts-new-wine-in-old-bottles and D. Mendis, Demystifying NFTs: From technology to intellectual property (2022) – tokenised as an NFT on OpenSea

[7] Jacob L. Nygard et al v Taylor Whitley, United States District Court, Central District of California (Case 8:22-cv-00425);

Miramax v Quentin Tarantino, United States District Court, Central District of California (Case No. 2:21-cv-08979);

Hermès International and Hermès of Paris Inc v Mason Rothschild, US District Court for the Southern District of New York at https://dockets.justia.com/docket/new-york/nysdce/1:2022cv00384/573363

[8] UK Jurisdiction Taskforce Report, 2019; Treasury Committee Consultation 2021; Financial Conduct Authority, 2022.

[9] AA v Persons Unknown & Ors [2019] EWHC 3556 (Comm); Ion Science Ltd v Persons Unknown (unreported) [2020] (Comm); DPP v Briedis and Reskajs [2021] EWHC 3155 (Admin), Danisz v Persons Unknown [2022] EWHC 280 (QB), [2022] All ER (D) 107. Fetch.ai Ltd and another v Persons Unknown Others [2021] EWHC 2254 (Comm); Osbourne v Persons Unknown & Anor [2022] EWHC 1021 (Comm); D’Aloia v Persons Unknown & Ors [2022] EWHC 1723 (Ch).

[10] Law Commission (England & Wales), ‘Digital assets’ (28 July 2022) at https://www.lawcom.gov.uk/project/digital-assets/

[11] Stephen Gardner, Andrea Vittorio, Blockchain’s Forgotten Memory Confounds EU ‘Right to be Forgotten’ (3 August 2022) at https://news.bloomberglaw.com/privacy-and-data-security/businesses-adopting-blockchain-question-eus-strict-privacy-law

[12] ibid.

[13] C131/12, Google Spain v AEPD and Mario Costeja González [2014] ECR I-000.