After The Drop: How To Manage NFTs
Forsters was delighted to host Artistate’s panel discussion on managing NFTs (Non-fungible tokens) on 30th June. Chaired by Pierre Valentin, head of art and cultural property at Constantine Cannon (and co-founder of Artistate), speakers included James Brockhurst, Forsters; NFT artists Ed Fornieles and Misha Milovanovich; Nicola Goldsmith, a tax accountant at Haines Watts; Nick Dunmur, Associate of Photography Business and legal adviser; and Camille Beckmann of Artistate.
The discussion centred on the practical, legal and tax issues that are caused by the creation and collection of NFTs.
NFTs vs Traditional Art Market
Pierre’s first question was directed at the NFT artists and addressed the gulf between NFTs and traditional art market practices. Ed saw NFTs as a novel way for artists to raise funds, as well as outmanoeuvre the art market’s traditional gatekeepers. Misha made it clear that the medium was a natural next step for digital artists to explore with the added benefit that it could monetise an otherwise difficult creative pipeline.
One of Ed’s series of NFTs, Finiliar, was displayed on the screen throughout. These works are ‘live’ in the sense that their moods are tied to the current value of a particular cryptocurrency and aim to reflect the emotional bonds that traders form with commodities.
The Blockchain revolution
James offered the room some wider context, noting that blockchains and decentralised ledger technologies were nothing short of a revolution, akin to the adoption of joint stock companies 400 years previously. Existing legal principles had been adapted to accommodate crypto assets, especially with regards to expanding the definition of "property". The significant early decision in the Singaporean case of B2C2 Ltd v Quoine Pte Ltd, as well as the recent case of Osbourne v Ozone Networks Inc. trading as Opensea and Persons Unknown confirmed that NFTs could be treated as property under English law.
Tax, Copyright and Intellectual Property Implications
Nicola tackled some of the tax issues arising as a result of creating or owning NFTs, which are both volatile in value and created and sold across jurisdictions.
Camille touched on the intellectual property and copyright concerns that naturally arise in the space due to the fact that the recycling of familiar imagery is a central tenet of NFTs. She noted the controversial incident involving artist-designed Stormtrooper helmets, which were subsequently minted as NFTs by Artwars and listed for a total of £5m, likely without the permission of the artists.
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