Are NFTs Really Non-Fungible?

This question has been bugging me for ages. It has nothing to do with whether the owner of an NFT has any right in a pre-existing/underlying image or asset to which the NFT is linked (the owner of the NFT does not (necessarily) have any rights in the underlying image/asset). My question relates to the token itself. There could be significant regulatory consequences if NFTs are not actually "non-fungible" since the UK Treasury, for example, has said that NFTs will not be subject to financial marketing restrictions.

TechnoLlama has pointed out that certain NFTs, such as profile picture (PFP) collectibles might not be protected by copyright. PFPs can be 'minted' with little human intervention beyond the creation of the very first stock character to which each newly minted NFT adds some 'unique' characteristic(s). The "consequence could be that if all of these thousands and thousands of profile pictures have no copyright, then anyone can do whatever they want with them." 

If an NFT is not protected by copyright so that anyone can mint the same image, then surely that NFT is fungible? I mean, if someone wants the image, they just mint it. They don't need the original token, right? And if I 'buy' that image, I might not care which of the many 'NFTs' that have been minted with that image is actually sent to me (maybe the lowest priced).

Similarly, as recently mentioned, ISDA has also considered the issue of fungibility in the context of voluntary carbon credits (which might themselves be tokenised into 'NFTs'). To aid liquidity, it is likely that two or more VCCs would be interchangeable for the purposes of satisfying VCC transfer obligations between traders, even if it was originally critical that the VCCs were uniquely generated in relation to different, specific projects/owners. In essence, the traders are likely only really interested in the fact that a VCC represents a tonne of CO2 reduced or removed (tCO2e). An airline might acquire VCCs generated from a forestry project to offset fuel emissions. Fungibility is therefore not a feature of the asset itself but a matter of context. As ISDA points out by way of example, banknotes are fungible to satisfy payment obligations, but are not fungible for tracing purposes (each note is serialized). Equally, therefore, a unique serial number does not preclude a VCC from being fungible. Accordingly, the issue is whether and in what circumstances different VCCs (or NFTs for that matter) will be treated as interchangeable.

In any event, if an NFT is not actually 'non-fungible' (e.g. by virtue of copyright or in some other context), the next question from a financial regulator's standpoint would be whether the token falls within either a regulated category of token, benefits from another express exemption or is still out of scope of regulation but for some other reason...