DAC8 and NFTs: Are Non-Fungible Tokens in Scope?

The treatment of non-fungible tokens (NFTs) under DAC8 is one of the directive's most debated aspects. While the core framework clearly covers fungible crypto-assets like Bitcoin and Ethereum, the boundary for NFTs is less defined and requires careful analysis.

The General Rule

DAC8's scope, aligned with MiCA, covers crypto-assets that can be used for payment or investment purposes. NFTs that are truly unique and non-fungible — such as digital art pieces or collectibles — are generally excluded from MiCA's scope and therefore from DAC8's reporting obligations.

However, this exclusion is narrower than it might appear. The key question is not whether an asset is labeled as an NFT, but whether it functions as a payment or investment instrument in practice.

NFTs That Are Likely in Scope

Several categories of NFTs may fall within DAC8's reporting requirements. Fractionalized NFTs, where an NFT is divided into fungible shares that can be traded independently, effectively function as investment tokens and are likely within scope. NFTs issued as part of a large, functionally identical collection (such as 10,000 generative art pieces with similar characteristics) may be treated as fungible for regulatory purposes. NFTs that grant financial rights, such as revenue-sharing tokens or tokens that entitle holders to future payments, function as investment instruments. NFTs used as payment instruments in specific ecosystems are within scope if they can be exchanged for goods, services, or other crypto-assets.

NFTs That Are Likely Out of Scope

Truly unique digital art pieces held for personal enjoyment rather than investment, event tickets issued as NFTs with no secondary market, digital certificates or credentials with no transferable value, and in-game items that cannot be traded outside a specific gaming environment are generally considered outside DAC8's scope.

The Grey Zone

Many NFTs fall into a grey zone where their classification is uncertain. NFTs that were created as art but are traded speculatively on secondary markets, NFTs with both utility and investment characteristics, and NFTs that can be exchanged for crypto-assets on marketplace platforms all present classification challenges.

CASPs that operate NFT marketplaces must develop clear policies for determining which NFT transactions are reportable under DAC8. These policies should be documented, consistently applied, and reviewed regularly as regulatory guidance evolves.

Practical Approach for CASPs

Given the uncertainty surrounding NFT classification, CASPs should adopt a conservative approach. When in doubt about whether an NFT transaction is reportable, it is safer to include it in the report than to exclude it. CASPs should monitor guidance from the European Commission, ESMA, and national tax authorities on NFT classification, document their classification methodology and the reasoning behind borderline decisions, and be prepared to adjust their approach as regulatory clarity emerges.

Conclusion

The DAC8 treatment of NFTs depends on their functional characteristics rather than their technical label. CASPs operating NFT marketplaces or facilitating NFT transactions must carefully assess each type of NFT against DAC8's scope criteria and develop clear, documented classification policies. The regulatory landscape for NFTs is evolving rapidly, and CASPs should expect further guidance from EU and national authorities in the coming years.