by Alison Kutler, Head of Government Affairs

An important part of being the leader in digital collectible NFTs is setting the bar high with best practices for how the industry can promote innovation while ensuring consumers are protected and NFT trading isn’t abused. That’s why we were pleased to participate in this year’s DC Blockchain Summit, an all-day event featuring discussions about the most pressing policy issues for digital assets and blockchain innovations. And we were encouraged to hear so many lawmakers, regulators and industry participants expressing the same goals we have and coming to the table with practical ideas for how to improve the safety and accessibility of blockchain. 

NBA champion Channing Frye joined me at the Summit to help policymakers get a feel for the excitement and enthusiasm around our products like NBA Top Shot, which gives the league’s 1 billion+ fans worldwide entirely new ways to interact with players and one another through innovative, engaging and fun digital experiences. He told the audience what this innovation means to him as a basketball fan and as a veteran of the court. “As a player, I want people to know me and support me – and not only basketball but the other endeavors I do as a human. This gives players this opportunity to connect with their fans and to grow their community. And it helps the NBA as a whole... It's a connector with the players to the fans." 

I shared what our company is doing to ensure content creators and fans benefit from a safe and secure digital ecosystem. As with any other good or collectible, the regulation of digital collectible NFT products occurs through the well-established regulatory regime enacted for consumer protection. We also believe NFT platforms have a responsibility to ensure they are deterring illicit activities and protecting businesses, digital assets, and the community from exploitation by criminals. Dapper Labs has instituted a risk-based, comprehensive set of industry best practices for Anti-Money Laundering (AML) and Know Your Customer (KYC) controls, and we are committed to setting the industry standard for implementing these protections.

But we’re not stopping there. NFT markets would benefit from greater industry and regulatory coordination. Here are a few practices and procedures we recommend, aimed at closing the regulatory and policy gaps in the NFT space:

1. The whole industry would benefit from a single fraud and trade monitoring authority to whom businesses could report any instances of wash trading and market manipulation they uncover.
2. We are committed to setting the gold standard for certification that will clarify and standardize terms into categories, much like movie ratings, and ensure consumers are fully aware of intellectual property and licensing rights. An industry association or other third party could help enable self-certification and create independent certification opportunities. 
3. When it comes to AML/KYC compliance, we’re aligned with many of the findings in the U.S. Treasury Department’s report on trade in works of art. Many of their recommendations – like updating guidance and training for law enforcement, customs enforcement and asset recovery agencies – apply specifically to identified risks of NFTs and should be explored.
4. Finally, we also support the creation of a self-regulatory organization to serve as a vehicle for the industry, in collaboration with relevant federal agencies, to create and enforce a wholly transparent, credible set of policies and standards that will instill trust among both consumers and authorities.

We have committed ourselves to high standards and best practices that will help secure the trust and good will of customers, content creators and regulators. And we know that ongoing public-private dialogue and events like the Blockchain Summit will help push the sector forward and drive innovation while building digital ecosystems that are safe, secure and available to everyone.

We look forward to continuing the conversation.