The Council for Sports Ecosystem Promotion publicly released NFT guidelines (Guidelines for Joint Establishment of Package Sales and a Secondary Distribution Market for NFTs that Utilize Sports Content) today.

The purposes of these guidelines are to aim for sound development of the NFT business in the sports industry and realization of appropriate fund circulation for sports organizations and athletes by conducting legal arrangements related to revenue return from secondary distribution markets and the applicability of gambling crimes and presenting business models that take consumer protection into consideration and for which development in Japan is considered possible for service provision similar to the NBA Top Shot that jointly establishes NFT package sales and a secondary distribution market that utilize sports content in light of the situations below.

1. The fact that, while a service called the NBA Top Shot (*) is experiencing popularity in the United Staes, concerns were indicated about the applicability of gambling crimes if services that jointly establish NFT package sales and a secondary distribution market are provided in Japan
   (*This is a service, called “Moments” and provided by Dapper Lab, which sells packages that randomly include NFTs for videos of basketball games played by NBA athletes, and Dapper Lab also operates a secondary distribution market. In popular athletes’ Moments, there are also items that are resold for high amounts of JPY 10,000,000 or more in a secondary distribution market.)
   
2. The fact that the rights relationships and rules for when revenue from NFT sales (including package sales) and secondary distribution markets are returned to sports organizations, and athletes have not been sufficiently organized, and for business operators, that is a factor that makes it difficult to develop NFT secondary distribution market services that utilize sports content that includes athletes’ portraits like that of the NBA Top Shot
   
3. The fact that an NFT White Paper – Japan’s NFT Strategies that Anticipate the Web3.0 Era was publicly released by the Liberal Democratic Party’s Digital Nippon Promotion Division on April 26, 2022, and proposals were made about 1 and 2
   

For the formulation of these guidelines, the Sports Digital Transformation Industry Working Group that was established within the Council conducted discussions with external experts (including multiple people who are in charge of the NFT business and who belong to professional sports organizations, and Professor Takashi Hashizume of the University of Tokyo Graduate School for Law and Politics) and, as an observer, the Commercial Service Group Sports Industry Office of the Ministry of Economy, Trade and Industry and conducted exchanges of opinions individually with industrial organizations related to blockchains and game industry organizations.

Please keep in mind that these guidelines present different types of business for which development is considered possible within Japan for the provision of services that jointly establish NFT package sales and a secondary distribution market that will utilize sports content, and in relation to other types of business, careful consideration and handling based on inquiries made to attorneys and other experts are necessary.

Utilization of NFTs in sports is evolving on a daily basis, mainly in Europe and the United States, and in order to increase the possibility of further utilization of NFTs in Japan as well, we plan to update these guidelines in the future, based on trends in Europe and the United States.

Click here for details about the NFT guidelines (similar to those for the NBA Top Shot).