Congressional Research Service 10 Non-Fungible Tokens (NFTs) creating services that are closed off to users unless they meet certain financial conditions. Web3 is often linked to and discussed alongside the metaverse, a highly immersive and interactive online world made possible through technologies such as virtual reality and augmented reality. Some supporters believe that NFTs may be used in the metaverse for various branding, trading or identity functions within virtual worlds,55 the purchase of virtual real estate in the metaverse,56 or creating skins or physical appearances for online characters and avatars.

Because NFTs can, in principle, tokenize and represent unique ownership of anything, some supporters believe that NFTs may be used as a form of digital identity.57 In an NFT identity registry, the credential takes the form of an NFT.58 NFT-based digital identity systems could exist outside of Web3 or the metaverse, but these concepts are often proposed together and interlinked by supporters. Both Web3 and the metaverse are amorphous concepts, with their own limitations and policy implications. Moreover, depending on how both develop, NFTs may play either an integral or a small role in their architectures.

Campaign Fundraising NFTs have been used for political and campaign fundraising,59 though the practice is infrequent.60 Campaigns and candidates in Minnesota, California, Arizona, and Wisconsin have issued tokens to reward donations, attract supporters, build community, and make campaign events exclusive to token-holders.61 NFT issuances may also be used to signal a candidates broader supporter for cryptocurrency, NFTs, and blockchain-related industries. As of May 2022, the Federal Election Commission (FEC) has not issued formal guidance on NFTs, but FEC Commissioner Ellen Weintraub has said that the use of NFTs fits plainly into existing rules and regulations as long as it falls within contribution limits.62 Some states, such as California, have issued guidance on NFTs in campaign fundraising, clarifying that the entire purchase price of an NFT must be reported as a contribution on a campaign committees campaign statements.63

55 Peter Cramer and Brendan ORourke, As NFTs Blur the Line Between Receipt and Product, Trademarks Owners Fight over New Virtual Markets, Proskauer Rose, April 12, 2022, 2022/04/as-nfts-blur-the-line-between-receipt-and-product-trademarks-owners-fight-over-new-virtual-markets/. 56 Raisa Bruner, Why Investors Are Paying Real Money for Virtual Land, Time, January 20, 2022, 6140467/metaverse-real-estate/. 57 Zachary Ignoffo, The New Use Case for NFTsSolving Online Identity Verification, Privacy Affairs, June 9, 2022, 58 See section on Non-Fungible Token Registry in Loc Lesavre et al., A Taxonomic Approach to Understanding Emerging Blockchain Identity Management Systems, National Institute of Standards and Technology, January 14, 2020, 59 For more information on campaign fundraising, see CRS Report R41542, The State of Campaign Financ