20 May 2021
With millions now being paid for certain non-fungible tokens (NFTs), Rahman Ravelli’s Joshua Ray wrote about why it is time for them to be officially classed as art.
In his piece, which was published by Fintech Futures, Josh states that NFTs are now a regular feature in the mainstream art market and trading in them is only set to increase.
Auction houses, art dealers, and online marketplaces have legal obligations under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). Under amendments that came into force on 10 January 2020, the MLRs now apply to art market participants who deal in sales, purchases and/or storage of “works of art” with a value of €10,000 or more.
But Josh emphasises that although these amendments are relatively new, they are already outdated because they did not foresee – or cover – the rise in NFT art. As the definition of a work of art in the MLRs is based on that contained in the 1994 Value Added Tax Act, it does not reflect the rise of internet-based art. There is also no reference to NFTs or other digital art forms in the British Art Market Federation’s 2020 guidance on money laundering for art market participants.
He explains why there is a need for the UK government to provide guidance on how the MLRs apply to those trading in NFTs. Josh also calls for clarity on whether such people qualify as cryptoasset exchange providers, who are covered by the MLRs.
Josh's article featured in Fintech Futures.