NFTs and tokenisation of real-world assets: uses and risks

What you will learn

• What a non-fungible token (NFT) records and what it does not.
• How tokenised real-world assets are built: legal wrapper, custodian and token.
• Which EU rules apply to which type of token.
• How fees and thin markets reduce the result of an NFT trade or a tokenised fund.

Explanation

NFTs

A fungible token is interchangeable: one unit equals any other. A non-fungible token (NFT) has a unique ID. On Ethereum the common standards are ERC-721 (one unique item per token) and ERC-1155 (a contract that can hold unique and multiple identical items).

What the NFT usually records on-chain: the token ID, the owner address and a link to metadata (name, description, image location). The image itself is often stored elsewhere, for example on a company server or a file network. If that storage disappears, the token may point to nothing.

Buying an NFT does not automatically give you the copyright to the image. Rights depend on the licence terms the creator publishes. Creator royalties (a percentage on each resale) are mostly enforced by marketplaces, not by the token itself, and some marketplaces make them optional.

NFT markets are thin. The floor price (the lowest current ask in a collection) is an offer to sell, not proof that you can sell at that price.

Tokenised real-world assets

Tokenisation means representing a claim on an off-chain asset, such as a government bond, a money-market fund share or gold, as a token. A typical structure:

1. A legal entity (fund or special purpose vehicle) owns the asset.
2. A custodian holds the asset; a transfer agent keeps the official register.
3. The token records your claim. Transfers are often limited to whitelisted (identity-checked) wallets.

The token is only as good as the legal claim behind it. Key questions: who is the issuer, which law applies, what happens in insolvency, and how do you redeem? Tokenised real estate and crowdfunding are covered in the Real Estate course, so we do not repeat them here.

Which EU rules apply

• Tokens that qualify as financial instruments (for example tokenised shares, bonds, fund units) fall under existing securities law such as MiFID II (Markets in Financial Instruments Directive), not under MiCA.
• Germany allows electronic securities, including "crypto securities" recorded on a blockchain-type register, under the eWpG (Electronic Securities Act) of 2021.
• The EU DLT Pilot Regime (since March 2023) lets licensed venues trade and settle tokenised securities.
• MiCA generally excludes truly unique NFTs. Large series or fractions of NFTs may be treated as ordinary crypto-assets. Classification depends on the facts; check the current rules.

Worked example

Hypothetical example 1 (NFT round trip): you buy an NFT for €2,000 and pay a 2% marketplace fee plus €5 network fee (gas). Later you sell for €2,300; the marketplace charges 2% and the creator royalty is 5%; gas is again €5. Taxes ignored.

1. Total cost = €2,000 + €40 + €5 = €2,045.
2. Sale proceeds = €2,300 × (1 − 0.02 − 0.05) − €5 = €2,139 − €5 = €2,134.
3. Net profit = €2,134 − €2,045 = €89, or about 4.4%, although the headline price rose 15%.

Hypothetical example 2 (liquidity): the collection floor is €2,300, but only two items sold last month. If you must sell quickly, you may need to price below the floor, and the net result can turn negative.

Common mistake

Practice activity

On paper: a hypothetical tokenised short-term government bond fund pays a gross yield of 4.0% per year and charges a 0.5% annual management fee. You invest €10,000 for one year and pay €10 network costs to buy and €10 to redeem. Calculate the net return in euros and percent. Then list two risks that a direct bond purchase through a German bank would not have in the same form.

Key takeaways

• An NFT records an ID, an owner and usually a link; the content and the rights often sit elsewhere.
• Floor price is an ask, not a guaranteed exit; NFT markets can be very illiquid.
• Tokenised real-world assets are claims whose value depends on the issuer, custodian and law.
• Tokenised securities follow securities law; unique NFTs are generally outside MiCA.

Next step

The next lesson shows how to read on-chain data: wallets, flows and what these numbers can and cannot tell you.