On March 11, 2021, a digital art piece in non-fungible-token form entitled “Everydays – The First 5000 Days” by digital artist Beeple was sold by Christie’s for a record 69.3 million USD in an online auction that garnered hundreds of bids over a two week period. The sale brought the rise of non-fungible token sales to global attention, as the digital art auction, the first of its kind held by Christie’s, not only set the record for the highest auction price for a digital work, but the third-highest price achieved for a living artist ever. The recent rise of NFTs, capped by the Beeple sale, has led to more attention being paid to what legal and regulatory questions exist in the burgeoning NFT marketplace.
Non-fungible tokens or NFTs are “one-of-a-kind” assets in the digital world that can be bought and sold like any other piece of property, but have no tangible form of their own. They exist wholly as digital assets existing on a blockchain platform, and give buyers a proof of authenticity and ownership that cannot be duplicated or compromised. In other words, an NFT is the digital version of a certificate of authenticity for a digital asset and, as we have seen, may carry a lot of value.
The recent rise of NFTs has led to questions surrounding what intellectual property ownership or license rights exist for the purchaser, as well as regulatory and tax considerations surrounding the sale of these digital assets. Many of these questions arise in the use of blockchain technology in general, and remain a point of ongoing discussion by legal and technology experts globally. While the Christie sale of Beeple’s digital art does not create new legal issues in and of itself, it does signify that the NFT market is burgeoning on a global scale. With more and more artists opting for the NFT route to sell their unique works of art, the NFT market warrants the attention of the legal profession, regulators, and policymakers. Will the Christie’s auction mark the peak of the NFT craze? Only time will tell, but if the market for NFTs continues to grow, so will the legal, tax, and regulatory questions surrounding their existence, ownership, and governance.
Summary By: Hashim Ghazi
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