The role of HEXA's review
Why does HEXA review NFTs?
On global marketplaces such as OpenSea, there is no review, and anyone can issue any kind of content right away. HEXA, too, aims to be a marketplace that many people can use freely at their own responsibility.
However, because HEXA accepts credit card payments in Japanese yen, it is bound by the terms of credit card payment processors and card companies (restrictions on what may not be sold), and because it targets users in Japan, it must, as a platform and "to the extent possible", exclude the issuance of content that violates the Payment Services Act, content that violates the Act against Unjustifiable Premiums and Misleading Representations, age-restricted content (NFTs can be withdrawn, so even an age restriction on the site might be judged insufficient; age-restricted content therefore cannot be issued at all), content contrary to public order and morals, and listings that sell something other than NFTs. HEXA cannot have a lawyer check each individual case, so ultimate responsibility still rests with the issuer.
Moreover, even though the issuer is responsible, many people, intentionally or unknowingly, list large numbers of items such as screenshots of TV programs or items that clearly infringe trademarks (judged via Google image search and the staff member's own experience and knowledge), and the review also aims to exclude these.
Passing HEXA's review does "not" mean that HEXA certifies an NFT as lawful
HEXA cannot fully review every case of trademark or copyright infringement. Even for items featuring a celebrity or a famous anime, the staff member may not know the celebrity or may never have seen or heard of the anime. And even if an item is suspected of resembling them, where the line falls is ultimately for lawyers and the courts to decide, not HEXA.
Why HEXA still allows general users to issue NFTs
Because of these concerns, many Japanese NFT marketplaces restrict issuance by general users and, in many cases, only allow people who are reasonably well known and publicly recognized as the creators of their work to issue NFTs after strict identity verification. At present, however (this may change in the future), HEXA will continue its stance of having issuers issue NFTs at their own responsibility, because we want it to be a marketplace that many people can use.
Review times
As for review times: HEXA's review is not perfect, a complete review is of course not possible, and issuers remain responsible. However, because the number of users is growing and to make the marketplace more trustworthy, we have revised our review system and set the following guidelines.
Weekday reviews: about every 12 hours
Holiday reviews: about every 24 hours
New features to make the marketplace more trustworthy
We plan to add the following features by early August 2022. They are currently being developed as our top priority.
1) Inappropriate content report notifications (released)
Reports of inappropriate content are sent directly to the issuer.
We forward the content of problem reports to the issuer, except in cases of obvious defamation or spam. Even if a report is made, no action is needed if the issuer has confirmed that the NFT is lawful and judges that there are no rights issues.
If the reporter is the rights holder and HEXA has confirmed with the reporter that they are the rights holder, or if HEXA reviews the NFT and judges it to be a clear violation of the Terms, HEXA will take action.
To report inappropriate content, use the "Report a problem with this NFT" link on every NFT page.
2) New field for supplementary rights information (released)
Issuers will be able to add supplementary information about the rights to the NFT content they release. At the time of issuance, issuers will be able to set two kinds of supplementary information: public information shown to everyone, and private information for the HEXA review team.
3) Rejection category disclosure (released 8/1)
When HEXA rejects an NFT for issuance, this feature tells you the category of the rejection. If your NFT is rejected, the rejection category (for example, from the standpoint of the Payment Services Act, public order and morals, or age restrictions) is sent along with the rejection email. We still cannot answer inquiries about exactly which points were rejected or how to pass the review. Even if HEXA approves an NFT, its legality is the issuer's own responsibility, so the issuer needs to check it.
Please also be sure to read "Points to note when issuing NFTs (laws and regulations)".
Rejection categories
Which part was rejected
The rejection email tells you which element was the reason for rejection: the content (image, audio, video, 3D data, etc.), the description, the holder-only content, or something else.
Rejection reason categories
The rejection categories are based only on a simple check by HEXA, and HEXA does not represent that everything not rejected in review is lawful content with all rights cleared. Under the Terms of Use, issuers represent and warrant the legality of their NFTs, and it is 100% the issuer's responsibility. HEXA cannot accept responsibility.
Trademark rights: Applies when the content or description is suspected of including a registered trademark name, three-dimensional shape, or the like. If you are the trademark owner, this must be evident from your account or NFT.
Copyright: Applies, for example, when a similar work exists on the web and it is not clear from the account that the NFT is being issued by the copyright holder. If you are the author, your X (formerly Twitter) account must show this, or supplementary explanation is needed (for example, a link from the rights holder's official website to the relevant X account).
Content or apps not licensed for commercial use: Applies when the content is suspected of being content that may not be sold as NFTs or content generated by an app that prohibits this. AI-generated content in particular is rejected when the AI was trained on copyrighted works on the web, because standards differ from country to country.
Age-restricted content: NFTs can be withdrawn and displayed outside the platform. Issuing NFTs of age-restricted content is therefore prohibited, and this category applies to content suspected of being age-restricted.
Act against Unjustifiable Premiums and Misleading Representations: Applies when an NFT is suspected of violating this Act, for example by giving NFT buyers perks with economic or other value.
Payment Services Act: NFTs deemed to be used for making payments (including the various regulations under the Payment Services Act, such as whether they count as prepaid payment instruments) are highly likely to qualify as crypto-assets, so this category applies to NFTs suspected of this.
Public order and morals: Applies to content judged to damage the trustworthiness of the platform and of the HEXA marketplace. These standards are reviewed from time to time based on the overall profile of HEXA marketplace users.
Account trustworthiness: Applies when the issuing account lacks credibility, so it cannot be trusted that the content being issued belongs to the issuer, or when the account is suspected of being a spam account. Newly created accounts and accounts with no visible activity need to build credibility, for example by being linked from other websites or social media.
Unclear rights: Applies when the rights situation is unclear. You need to add more information to the public supplementary rights information.
Other: Applies when the content does not fall under any of the above but is judged to violate the Terms of Use.
Common rejection cases other than copyright and trademarks
NFTs whose description mentions randomized prizes
At present, HEXA rejects, in most cases and to the extent we can identify them in review, NFTs whose description promises a prize of a certain value at the time of purchase where the prize is uncertain and involves an element of chance.
NFTs with descriptions that could mislead buyers on the secondary market
NFTs can be resold, so they may be acquired not only in the primary sale but also on the secondary market. NFTs whose description could mislead buyers on the secondary market are also rejected, to the extent we can identify them in review.
Watch out for silhouettes and 3D trademarks
Please be careful with silhouettes and three-dimensional trademarks. There have been court cases in the past involving famous buildings. If your NFT was rejected and contains content that may be relevant, please check it. Passing review does not mean an NFT is fine, so please check before issuing.
Cautions and warnings when issuing AI content
With AI-generated content, even when the generating app does not explicitly claim copyright, some AIs generate content using copyrighted works on the web as training data. How this is judged differs from country to country, and in Japan it seems to be considered acceptable in many cases, but by their nature NFTs can be withdrawn to a wallet and resold on other platforms. Some countries may regulate certain types of AI in the future, so HEXA rejects content where it can see concerns about legality. For AI-generated content, please include, in the supplementary rights information, information about the rights to the content the AI was trained on. Also note that even if an AI app states that users own the rights to what they create, that does not mean the service guarantees legality. A statement by an AI app that commercial use is allowed does not guarantee the issuer's legality, and if the AI app infringes any rights, all responsibility lies with the issuer who turns the content into an NFT and sells it (because the issuer has represented and warranted that they hold the rights), and the issuer becomes liable for damages. HEXA cannot detect everything in review, and approval by HEXA in no way exempts issuers from responsibility. We therefore ask that you apply to issue only content for which you, at your own responsibility, hold 100% of the rights needed to turn it into an NFT.
Please also be sure to read "Points to note when issuing NFTs (laws and regulations)".
How we handle whether large numbers of visually identical NFTs qualify as crypto-assets
Updated 2023/3/29
It is assumed that issuers represent and warrant the legality of the NFTs they issue. On 2023/3/24, the Financial Services Agency published a clearer view on whether NFTs that are visually identical qualify as crypto-assets, so please see here.
HEXA strictly prohibits the issuance of NFTs that qualify as crypto-assets. HEXA cannot judge individual cases as to what qualifies as a crypto-asset, so issuers must pay attention to this question and issue NFTs lawfully. Residents NFTs and LAND "cannot be withdrawn" and can be traded only within the HEXA service, so they are treated differently from withdrawable NFTs.
HEXA rejects NFTs that, under HEXA's review standards, it clearly judges highly likely to qualify as crypto-assets. NFTs where this is not clear are issued at the issuer's own responsibility. If you are unsure, please consult a lawyer in advance.
Finally
Our review cannot investigate every rights issue. Perceptions differ by generation and taste, and even lawyers disagree. The final judgment rests with the courts and cannot be made by HEXA's review. In the end, everything is the issuer's responsibility, and the review is only a minimum check. Please confirm legality yourself before issuing.