UK: Non-Fungible Tokens, The Cryptocurrency Art Boom And How To Get Paid
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Over the past few weeks Non-Fungible Tokens (‘NFTs’)
have upended the traditional art market. These unique ‘tokens’ are secured using blockchain technology (Ethereum
in the majority of NFT instances) and so can provide a definitive
and verifiable digital provenance for anything from a JPEG to music
to real estate in the real world. They are purchased using
cryptocurrency and therein lies the potential hazard for artists,
collectors, and the venture capitalists fuelling the growth of
online NFT ‘marketplaces’.
What is an NFT?
An NFT can be assigned to basically anything, from Twitter CEO
Jack Dorsey’s first tweet1, a collage by digital
artist Beeple or your favourite internet meme2. It can also be a
physical thing, like a painting commissioned by American rapper Ja
Rule to promote his ill-fated Fyre Festival3, or a video
work by Canadian musician Grimes4. In short, NFTs are
being billed as a way for anything, digital or physical, to be
What do you put into it?
The reason NFTs have made headlines of late is because the sums
involved in recent sales have ranged from the sublime to the
ridiculous. Dorsey’s tweet sold for USD $2.9m, Beeple’s
Everydays – First 5000 Days sold for USD
$69.9m5, whereas a ‘tokenized’ meme can be
purchased or traded for pennies. The unifying factor is that all of
the funds used to buy these NFTs were
What do you get out of it?
Leaving aside the more esoteric questions of ownership, what you
get when you purchase an NFT is simply a piece of code. That’s
it. Anything else is negotiable – and we suggest ought to be
negotiated in advance.
How much does it cost?
This is the thorny issue7. Whereas NFTs auctioned by
Christie’s can evidently command blockbuster figures, there are
growing instances of NFTs being ‘minted’ without the true
owner’s consent8. This causes a myriad of legal
issues, particularly where an artist’s work is being monetised
without their knowledge, let alone consent, or in breach of a
platform’s agreed terms and conditions. In such instances it
can be difficult for an artist or marketplace to recover what they
are entitled to from the party in breach.
The matter is also more complicated than it may appear. For
example, each digital marketplace or retail platform’s T&Cs
may prescribe entirely different ownership rights over an NFT to a
collector. This could include the extent of utilization of a
copyrighted work, intellectual property rights, trademarks and
licensing (including open-source and creative commons licensing). A
further question is then raised, is ownership of the work intended
for personal enjoyment only, or can it be monetized in further ways
by the new owner (think ‘t-shirts with a Banksy design on
The questions facing both artists and collectors are two sides
of the same bitcoin: ‘how do I protect what I’ve
purchased’ and ‘how do I protect what I’ve
How we can help.
Astraea Group can advise you on how to enforce your contractual
rights and recover what is rightfully yours. We have a solid track
record when it comes to recovering crypto assets, whether in the UK
or globally. James Ramsden QC is also a recognised leader in crypto
asset recovery, frequently involving third party trading platforms,
crypto wallet ‘custodians’ and FX traders. With our
specialist team of litigators, we are perfectly positioned to
advise you on the most efficient and economical way to make sure
that your rights are upheld.
6 With the notable (and controversial) caveat that
Christie’s earned approximately USD $9m in fungible cash from
the Beeple sale (and is, unsurprisingly, due to schedule another in
the near future).
7 “”What we need to understand is that what
is being traded is not the artwork, it’s the
participation,” says Edmund Schuster, an associate
professor of corporate law at the London School of Economics.”
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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