Navigating the adoption of NFTs

Recent years have been explosive for NFTs, as they skyrocketed into the mainstream and captured significant mindshare: the world’s first ever digital art sale auctioned for $86.5 million and institutional adoption continued with an acquisition of a CryptoPunk by a leading payments provider. Household brands started to participate in the space: over fifteen corporate NFT collection releases across many industries were observed, ranging from food & beverage, sporting goods, high-end luxury fashion, and consumer retail to social media and news companies. OpenSea – the world's first and largest NFT marketplace – continues to stand as the preferred launchpad for corporate NFTs.

Although the current bear market cycle has shed light on concerns around the value of NFTs, profit-based motivation and environmental sustainability, periods of volatility and cyclicality are to be expected with any nascent technology as it develops a product-market fit. Looking forward, the ability to assert ownership and exchange of Web3.0 assets and property is what will likely dictate the long-term value of NFTs.

For many, knowing where to start when it comes to NFTs can be difficult. For this reason, our team has developed the following guide to help you understand the emergence of the NFT industry, recent trends, institutional adoption, key challenges, and how KPMG in Canada can help organizations throughout the digital asset journey.

Digital rights: Defining who has ownership of the rights to mint the IP in an NFT format.

Cyber protection: Working with IT to protect the NFTs and their supporting platforms to prevent hacking and unauthorized use. ​

Tax and compliance: Managing and adhering to the regulatory compliance of the cryptocurrency world.​

Marketing: Promoting/advertising the organization’s NFT across social media channels and on the digital marketplace.​

Governance: How NFT rights, licensing, purchases and sales are monitored and governed across customer community to protect and preserve the organization’s brand.​

Financial reporting: Defining the reporting needed including royalty reporting to artists when NFTs change hands.​

Contracting: Defining the future contractual requirements and rights to enable NFT minting/selling. ​

Data: Defining what data is needed to support the NFT initiative.​

Talent: Attracting the talent needed to support and maintain the NFT lifecycle within the organization.​

Enabling technology: Defining the platforms, internally and externally, to support the NFT initiative.​