A Singaporean High Court has ruled that NFTs are property and should receive legal protection, setting a precedent for future legal matters pertaining to NFTs.
This was in a recent legal dispute between a lender and a borrower who used his Bored Ape #2162 as collateral to secure a loan that he later defaulted on. After defaulting, the two agreed on refinancing the loan. It is reported that the lender later reneged on the agreement and intended to seize the NFT. The claimant then filed for court action to prevent the seizure, which resulted in the judge ruling that the lender, known as chefpierre, broke the refinancing agreement, and allowing the claimant to serve him court papers virtually.
This is a big first step towards the legal protection of NFTs and a big win for people who can now see situations where NFTs are recognised as property and therefore have legal protection.
There are risks involved for both lenders and borrowers in instances like this given that NFT lending is still a very new field, which we have explored in a previous podcast episode with Gabe Frank of NFT lending platform Arcade. There are a lot of worldwide legal issues with NFTs that still need to be decided, which we recently discussed on another podcast episode with IP lawyer Jeremy Goldman. The involvement of the Singapore Court in this recent case helps establish legal precedent that can be looked at by other courts around the globe.