Content media

Non-fungible tokens: content space?

IN Last year we saw an explosion of news regarding non-fungible tokens (NFTs).

For the uninitiated, NFTs are unique, one-of-a-kind digital representations of real objects that cannot be replaced with anything else. Deployed through distributed ledger technology such as Blockchain, NFTs are created and traded on NFT marketplaces, and traded through the use of cryptocurrencies.

It’s not always clear how NFT intersects with existing laws given the technology involved, but essentially a digital representation of anything raises issues of overlap with digital content, thus bringing NFT into the scope enforcement of content regulations.

In Malaysia, content is regulated by the Communications and Multimedia Content Code. Implemented and enforced by the Malaysian Communications and Media Content Forum. The Content Code describes best practices and standards for broadcast content in the communications and multimedia industry.

The Content Code defines “content” to include any text, still or moving image or other audiovisual representation or combination of the foregoing that may be created, manipulated, stored, retrieved or communicated electronically.

Since NFTs are capable of representing the objects intended by the creators of NFTs in different sensory ways, for example, visibly or audibly, it is unlikely to be disputed that NFTs fall within the scope “Content” under the Content Code.

While NFT presents new and exciting opportunities for artists and creators looking to diversify their engagement and multiply their revenue streams, this is not always achieved without risk. For example, the NFT website “Monyet Istana” by local graphic designer and satirist Fahmi Reza, which depicted a monkey in what appeared to be royal clothing, was temporarily blocked shortly after its launch. It has also been reported that a local NFT marketplace has been ordered to stop selling NFTs containing cartoon depictions of male genitalia with human characteristics.

As “content” and a form of intellectual property, despite occupying virtual technological space as “tokens” that can be traded, NFTs are still subject to content regulation.

Generally, the content code prohibits offensive content such as hate speech, which covers depictions that disparage, defame, or demean a person or group on the basis of race, ethnicity, and religion. (among other factors). Although the content code also provides exceptions in circumstances of satire and parody, or where it is clear to an ordinary user that the content is fiction, these exceptions would generally apply in the case of content ” false” as opposed to offensive content.

Therefore, the scope of what would amount to offensive content casts a considerably wide net that is likely to cover offensive NFTs about the monarchy in Malaysia.

In the case of NFTs depicting human genitalia, the content code prohibits indecent content, meaning material that is offensive, morally inappropriate and contrary to current standards of accepted behavior.

In this regard, while the Content Code generally prohibits the depiction of nudity, the latest edition of the Content Code (effective May 2022) has introduced a limited exception for art-based non-sexual nudity, the information and/or science. Therefore, the depiction of human genitalia in these TSNs may fall under the new exception for art-based depictions, provided, however, that the depictions are not excessive or explicit in nature. That said, whether this would indeed be the case here would depend on the scope of this new exception, which has not yet been tested.

It is not only NFT creators who need to be aware of the content code, but also NFT market operators, since the latest edition of the content code expressly introduces a new definition of online market operators and stipulates that Creators and online marketplace operators are responsible for compliance with the relevant provisions of the Content Code.

Under the latest Content Code, compliance with its provisions remains mandatory only for certain players in the content and media industry. Nevertheless, demonstrated compliance with the provisions of the Content Code would constitute a defense against suits, actions or proceedings where a matter is dealt with under the Content Code and the Communications and Multimedia Act 1998.

However, the content code is not a comprehensive reflection of the regulatory space governing content in Malaysia, and NFT is also subject to other laws, including intellectual property laws, defamation law and Criminal Law.

As such, as stakeholders inhabiting the NFT space forge ahead in this exciting new arena, these stakeholders are advised to seek formal legal advice before taking any decisive (and creative) action.

This the article is written by Yu Xin Yi of Christopher & Lee Ong.