Chair
Christopher R. Marshall (University of Melbourne)
Panellists
Kristijan Poljanec (University of Zagreb), Georgia Gerson (University of York), Zoran Poposki (The Education University of Hong Kong)
EU Crypto art market after MiCA Regulation
Kristijan Poljanec (University of Zagreb)
The European Union (EU) has recently adopted its first law on crypto-assets – the Markets in Crypto-Assets Regulation (MiCA) – aiming to provide legal clarity for an expanding, yet poorly regulated crypto market. However, the significant part of the crypto-art market has been left outside MiCA, as it will not apply to crypto-assets that are unique and not fungible with other crypto-assets (NFTs), including digital art and collectibles, alongside crypto-assets representing services or physical assets that are unique and non-fungible (e.g., NFTs representing physical paintings). On the other hand, MiCA will apply to fractions of NFTs, NFTs issued in a large series or collection, and other NFTs which are de facto fungible or not unique (FTs). The rationale behind this exclusion is the need to restrict MiCA’s scope of application to highly traded generic tokens and, thereby, limit the financial risks of their use to holders and the financial system.
Therefore, whereas art-related fungible (interchangeable) tokens such as tokenized generic fractions of artworks and NFTs collectibles of avatars shall arguably be subject to MiCA’s far-reaching requirements, unique art-related NFTs shall be arguably covered by the current general EU financial services regulations, notably the Markets in Financial Instrument Directive (MiFID II) and the Payments Services Directive (PSD2). Nonetheless, art-related FTs will be covered by MiCA unless they simultaneously fall under the category ‘negotiable instruments’ from MiFID II, and unique art-related NFTs will be covered by the current financial regulation only to the extent they fit within the general concept of ‘negotiable instrument’ or ‘payment services’, both notions being rather vague and interpreted differently across EU. If, however, unique NFTs do not fit within these concepts, their legal qualification and the applicable legal regime for their issuance, trade and supervision is entirely uncertain.
This paper covers the implications of this new law for the EU crypto-art market, aiming to deliver a systematic legal study of the post-MiCA market by, firstly, reviewing MiCA solutions for crypto-art and, secondly, exploring different legal regimes that should apply to the issuance, public offer, accompanying services, and transfer of different types of the excluded crypto-art, most notably unique NFTs. In this regard, comparative US and Swiss solutions will be analyzed, and some ideas will be made to improve the current state. It is argued that the new ‘multi-tier’ or parallel approach to regulating crypto-art should be replaced by a single solution for crypto-art, as the new regime has created a highly complex and fragmented legal framework, resulting in even more legal conundrums than before, and leaving the EU crypto-art issuers and traders in a kind of legal limbo between the general EU capital market law, most notably securities law, and Member States’ laws.
The Hall of Mirrors: Reflecting on the changing face of the NFT market through first-hand interviews
Georgia Gerson (University of York)
Non-fungible-tokens (NFTs) exploded into the art world in early 2021, offering revolutionary decentralised technology to disrupt the legacy trading models of the contemporary art market.
Initially, fascination, prices and speculation were high. Auction houses, commercial galleries and art fairs rapidly developed their business model in order to compete and claim the rewards of this new space. As such, the role of intermediaries has still proved pivotal in the construction of this new market.
However, the turbulent market for NFTs has peaked, troughed and cooled over the last two years. In order to justify major investment in marketing the new technology and quell a concerned collector base, the language and strategies of these intermediaries has shifted. More and more frequently ‘NFT’ is nowhere to be seen in the advertisement of exhibitions or sales, as they move away from jargon and fall back on well-worn art market sales techniques to create legitimacy, such as the creation of art-historical lineages and a rejection of over-financialised language.
From a research perspective, this offers a unique opportunity to study in real time how art market intermediaries change their approach to value-construction in the face of an extreme fluctuating market. The proposed paper will present preliminary findings from one of the first qualitative studies amongst gallerists, auction houses and artists involved in the sale of NFT art that I am undertaking for my PhD. Building on my contribution to TIAMSA’s 2023 conference, the paper will interrogate these interviews to offer an up-to-the-minute assessment of how intermediaries have had to respond and adapt their strategies in the changing face of the market, and what this might teach us more broadly about value-creation in the sale of contemporary art.
A corpus based critical discourse analysis of the NFT art market
Zoran Poposki (The Education University of Hong Kong)
The recent advent of non-fungible tokens (NFTs) has profoundly disrupted the contemporary art market, but their status remains contested. While advocates tout the democratizing potential of NFTs to expand access and recognition for digital artists, critics dismiss them as a speculative bubble detached from true artistic value. This study elucidates the complex and evolving positioning of NFT art within mainstream art market discourse through an interdisciplinary analysis synthesizing critical discourse analysis, corpus linguistics, and the political economy of art.
Examination of three key 2023 art market reports from leading auction houses and analytic firms furnishes empirical insights into how influential art world institutions are framing and appraising NFT art. Linguistic pattern analysis reveals NFT art's increasingly solid yet variable integration across art market segments. NFT art appears well-assimilated into mainstream art discourse, but remains emergent at the upper echelons of high art valued in the tens of millions.
Our critical analysis of institutional appraisals uncovers uplifting endorsements of NFT art alongside ethical tensions around accessibility, diversity, sustainability, and art historical continuity. Market predictions point to NFTs both democratizing art access through digital replication while concentrating wealth through speculation. Assessments highlight NFT art enabling new diverse creators, even as gender imbalances persist. Climate impacts are noted but not fully reckoned with.
Ultimately, we find NFT art simultaneously amplifying and challenging existing art world hierarchies. NFTs create new pathways to artistic visibility, patronage, and wealth accumulation that circumvent traditional gatekeepers. However, persistent inequalities rooted in the broader political economy suggest more transformational change may be required. This study concludes that the trajectory of NFT art remains contingent and contested, creating openings for alternative futures counterposed by risks of replication of existing exclusionary systems. But their advent undoubtedly signifies a disruption with cultural reverberations still unfolding.