Digital art frenzy raises questions for tax, law enforcement
Caitlin Reilly, 13 April 2021
The sale last month of a digital piece of art for a near-record price raises new questions about a technology that the financial sector sees as offering great opportunity.
Christie’s auctioned the artwork for $69 million and recorded the transaction on a public blockchain as a “non-fungible token,” or NFT. The digital collage incorporating 5,000 separate digital images was created by Beeple, whose real name is Mike Winkelmann, and can be seen on the auction house website. Continue reading “Article: Digital art frenzy raises questions for tax, law enforcement”
The Nonfungible Token
Scott H. Kimpel, 06 April 2021
A recent Bloomberg article reported that average prices for nonfungible tokens, or NFTs, are down approximately 70 percent from recent highs. NFTs are the latest innovation in digital assets and encompass digital representations of unique works of art, music, or other goods and experiences stored on blockchain. Unlike other digital assets such as bitcoin, in which each bitcoin is the same as every other one (and thus “fungible”), each NFT is theoretically unique and different from every other one (and thus “nonfungible”). A wide range of NFTs have begun to enter the marketplace over the past several months. A digital work of art represented by an NFT recently sold at auction for over $69 million, and even a professional sports league has begun to issue NFTs. A fascinating debate about the social and economic utility of NFTs has emerged, but what are some of the legal issues associated with this new digital asset class? Continue reading “Article: The Nonfungible Token”
Did The NFT Boom Just Burst?
TYLER DURDEN, 03 April 2021
Non-fungible tokens, or NFTs, are changing the way we think about art (and other collectibles), and in 2021, investors have started to take notice. As Decrypt writes, in the last year, NFTs have shot to the forefront of the crypto space. The cryptographically-unique tokens make it possible to create real-world scarcity for digital objects, and artists have seized on the opportunity presented by the technology.
“It’s not meaningful to characterize a concept as a financial bubble,” said Chris Wilmer, a University of Pittsburgh academic who co-edits a blockchain research journal. Continue reading “Article: Did The NFT Boom Just Burst?”
What Cos. Need To Know Before Entering Nascent NFT Market
Michelle Ann Gitlitz, David Ervin and Carissa Wilson, 31 March 2021
On March 11, the artist known as Beeple sold for $69.3 million a digital collage work, “Everydays: The First 5000 Days,” and its associated nonfungible token, or NFT. The auction was conducted by Christie’s International PLC and “Everydays” became the third most expensive work ever sold by a living artist.
A few days later, an image of The New York Times column, “Buy This Column on the Blockchain!” was turned into an NFT and sold for $560,000.
The musician and artist Claire Boucher, known as Grimes, sold nearly $6 million worth of digital artworks as NFTs in under 20 minutes. Continue reading “Article: What Cos. Need To Know Before Entering Nascent NFT Market”
Money Laundering Might Taint NFTs Too, Prepare For Tighter Controls
Simon Chandler, 27 March 2021
While non-fungible tokens (NFTs) are certainly the big thing in crypto at the moment, they aren’t without their problems. Aside from accusations of hype and faddishness, NFTs also raise the familiar and thorny issue of money laundering.
Without much in the way of quantitative proof, detractors have linked the burgeoning NFT market with money laundering, with some people describing them as the “best money laundering method in the cryptocurrency world.”
However, industry players speaking with Cryptonews.com suggested that, while NFTs are open to money launderers, there’s currently nothing concrete to indicate that their use for laundering is significantly worse than it is in the traditional art world, or with other types of crypto. At the same time, they attest that the strict introduction of KYC/AML (know your customer / anti-money laundering) standards will help combat this emerging problem. Continue reading “Article: Money Laundering Might Taint NFTs Too, Prepare For Tighter Controls”
NFTs: Legal Risks from “Minting” Art and Collectibles on Blockchain
Quinn Emanuel Urquhart & Sullivan, LLP, 25 March 2021
The growth of NFTs in art has been fueled by its unique attributes. NFTs can allow artists to better monetize their work by selling NFTs directly online without middlemen. Access to a readily accessible online resale market could also mean that works gain value quickly. And unlike the traditional U.S. art market, artists may benefit from the rise in value of their work by incorporating commission requirements in the smart contracts that accompany NFTs (for example, the SuperRare NFT marketplace requires that creators receive a 10% commission when artwork continues to trade on the secondary market).
Some hope that NFTs will open up a new revenue source for artists, including underrepresented artists, either by allowing artists who traditionally do not sell in galleries to sell directly to buyers online, or by allowing artists to sell something in addition to their tangible works. For example, an artist could sell an NFT of the digital image of a painting or sculpture to one buyer, while selling the physical work to another buyer, allowing the artist an additional opportunity to profit from the work. Continue reading “Article: NFTs: Legal Risks from “Minting” Art and Collectibles on Blockchain”
NFT Market Is Like Gambling in a Casino: L’Atelier BNP Paribas CEO
Scott Chipolina, 25 March 2021
The NFT boom has seen a lucky few make fortunes overnight—but, according to the CEO of L’Atelier BNP Paribas, buying them is akin to gambling in a casino.
“I think it’s probably akin at this stage to going into the casino,” said John Egan, CEO of L’Atelier, in an interview with BNN Bloomberg. “You know you’re going to spend money, but maybe you’re doing it for the enjoyment, for the experience. If you win, you’ve got lucky.”
BNP subsidiary L’Atelier, which focuses on identifying trends in emerging markets, released a report in 2020 which highlighted non-fungible tokens (NFTs) as a key area of the emerging virtual economy. Their predictions appear to have been borne out, with the market for NFTs exploding in the second half of 2020 and early 2021. Continue reading “Article: NFT Market Is Like Gambling in a Casino: L’Atelier BNP Paribas CEO”
Market Manipulation Chatter Rises as Digital Art Scene Explodes
Brandon Kochkodin, 13 March 2021
A digital artwork by Beeple set auction records Thursday when it sold at Christie’s for a mind-bending $69 million. Twitter Inc. co-founder Jack Dorsey is auctioning the non-fungible token for the first tweet ever, “just setting up my twttr,” with the highest bid coming in at $2.5 million, so far. LeBron James highlights are fetching six figures.
If you were somehow unaware, digital assets are booming, with buyers paying up for so-called NFTs that give them exclusive ownership of electronic tchotchkes. Explanations for why, say, a GIF of a cat with a rainbow trail commands a king’s ransom aren’t hard to come by. The more prosaic theories say the price per pixel is surging as Bitcoin and other cryptocurrencies mint new millionaires every day and those newly rich digital natives look to spend in their adopted domain. And sure, it could be as simple as a good old mania around the latest shiny object that’s caught people’s attention.
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