Tokenized art: shares in artworks on a ledger
Tokenized art splits the ownership rights in a physical artwork into tokens on a blockchain, so several investors can hold a share of one painting and trade it. The painting itself stays in storage; the token records who holds which share of it. Dated events on the topic are in the calendar below.
A Picasso in 4,000 tokens
In July 2021, the Swiss bank Sygnum and the art investment firm Artemundi split the ownership rights in Pablo Picasso's "Fillette au béret" from 1964, valued at four million Swiss francs, into 4,000 tokens issued by Sygnum Bank, as the Crypto Valley Journal reported. The minimum subscription was 5,000 francs through Sygnum's e-banking platform, the painting went to a high-security storage facility, and the tokens were to trade on SygnEx, Sygnum's platform for digital assets.
The payment side
Investors paid in DCHF, Sygnum's digital Swiss franc stablecoin, so purchase and token transfer could run on the same ledger. In euro, the regulated equivalent is an e-money token under MiCA; the page on delivery versus payment explains how the token and the payment can settle together.
The economics stay those of art. A painting pays no interest or dividend, so a holder earns only when the work is sold or when another investor buys the token at a higher price. Storage and insurance cost money every year, and a token on a single work trades only when a buyer exists.
Securities law or MiCA
Which rules apply depends on how the token is built. A token that works as a transferable share in an investment vehicle is usually a financial instrument; then MiFID II and the prospectus rules apply, and in Germany it can be issued as an electronic security in a crypto securities register. A token that is not a financial instrument falls under MiCA. MiCA leaves out crypto-assets that are unique and non-fungible, but a Société Générale note on MiCA points out that fractional parts of such an asset do not fall under that exclusion. A share of a painting split into 4,000 tokens is not unique in the MiCA sense. The page on NFTs in finance covers single, unique tokens.
Upcoming events on investment and digital assets in Germany
Finance Loop and tokenized art
Tokenized real-world assets in institutional capital markets were the subject of the Zurich side event Tokenization & On-Chain Capital Markets during the Point Zero Forum. Finance Loop has a strategic cooperation with 21X, the Frankfurt venue for tokenized securities, and the Multichain Asset Managers Association is an event and network partner of Finance Loop.
Investment & Digital Assets
Risk & Compliance
What is tokenized art?
Ownership rights in an artwork split into tokens on a blockchain. Each token holds a share of those rights, while the physical work stays in storage.
Which artwork did Sygnum tokenize?
Pablo Picasso's "Fillette au béret" from 1964, valued at four million Swiss francs and split into 4,000 tokens in July 2021, with Artemundi as partner.
Does MiCA apply to tokenized art?
It can, when the token is not a financial instrument. The MiCA exclusion for unique, non-fungible crypto-assets does not cover fractional parts of a unique asset.
How does an art token earn a return?
Only through a sale of the work or of the token at a higher price. A painting pays no interest or dividend, and storage and insurance cost money.
Tokenized art and Finance Loop
Finance Loop covers tokenized art in its Investment & Digital Assets track, next to tokenized private equity, tokenized gold and real-world asset tokenization. Finance Loop brings people from private banks, wealth managers, law firms and tokenization platforms together at events in Frankfurt, Munich, Berlin and Hamburg.
Finance Loop is a professional network and has the goal of driving the adoption of emerging technologies in finance, such as AI, digital payments, cloud and blockchain solutions. Finance Loop helps its members build skills and personal networks in these fields: Investment & Digital Assets, Payments & Digital Money, Digital Infrastructure & Sovereignty, and Risk & Compliance.