Are NFT Royalty Payments Guaranteed By Law?
Creators drawn to NFTs are often told that royalties will follow their work through every future resale, but that promise rests on a different foundation than most people assume.
The short answer
No, NFT royalty payments are generally not guaranteed by law. They are typically enforced through smart contract code or a marketplace’s own policies, not through legal statute or copyright law in the way royalties work for, say, published music or books. That means whether a creator actually receives a royalty on a resale depends on technical enforcement and marketplace cooperation rather than a legally binding entitlement — and both of those can fail or change.
How NFT royalties are actually supposed to work
Many NFTs are minted with a royalty percentage written into their smart contract, intended to route a portion of every future sale automatically back to the original creator, a mechanic seen in other NFT categories too, including how resale royalties are built into NFT event tickets. This is often presented as one of the more compelling features of NFTs — ongoing compensation as a piece changes hands, unlike a traditional artwork sale where the artist typically receives nothing on subsequent resales. The mechanism sounds automatic and enforceable because it’s coded into the token, but that code only works if the platform facilitating the sale actually honors it.
Why enforcement can break down
- Marketplace-level bypass. Some marketplaces have chosen to make royalty payments optional or have stopped enforcing them altogether, since nothing in most blockchain protocols forces a marketplace to honor a royalty field.
- Peer-to-peer transfers. A direct wallet-to-wallet transfer, arranged outside a marketplace entirely, can bypass royalty logic altogether since there’s no marketplace interface enforcing the fee.
- Cross-marketplace inconsistency. A royalty honored on one platform may be ignored on another, since royalty standards aren’t universally or uniformly implemented across the space.
- No underlying legal requirement. Unlike statutory resale royalty rights that exist for certain physical artworks in some jurisdictions, there is no equivalent broad legal mandate specifically covering NFT resale royalties in most places, and broader crypto regulatory classification remains unsettled in ways that leave this area especially undefined.
How this differs from copyright itself
It’s worth separating royalty payment from copyright ownership, since the two are often conflated. Owning an NFT does not automatically grant copyright over the underlying artwork or asset, and what happens to copyright when an NFT is resold depends entirely on the terms set at minting, not on the royalty mechanism. A creator can retain copyright while still losing royalty income if a marketplace stops enforcing the fee, and conversely, royalty enforcement doesn’t say anything about who holds copyright.
What this means in practice
- For creators, royalty income from secondary sales should be treated as something that may fluctuate or stop, not a fixed or guaranteed revenue stream, since it depends on marketplace choices outside their control.
- For buyers, understanding that royalties aren’t legally mandated helps set realistic expectations about a token’s total cost across platforms, since fees can vary depending on where a resale happens.
- For anyone evaluating a project, the presence of a royalty percentage in the metadata says nothing about whether it will actually be paid — that depends on where and how the resale takes place.
The takeaway
NFT royalties function more like a technical convention that marketplaces can choose to support than a legal right a creator can enforce in court. Anyone relying on royalty income, or budgeting around receiving it, benefits from understanding that the payment depends on cooperation up and down the chain — smart contract, marketplace, and buyer behavior all have to align for it to actually happen.