Deregulating Collecting & Digital Estates

No rules for New York's auction houses, and using NFTs to preserve dead artists' works

Cultured is a newsletter that gets readers up to speed on the most interesting things going on at the intersection of finance, art, collectibles, NFTs, and more. Cultured is produced by Otis, an alternative investment platform that was recently acquired by Public.com.

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🗞 STORIES OF THE DAY

New York’s auction house deregulation may erode collectors’ trust

• A surprise move to deregulate NYC’s auction houses has worried experts, who say the lack of rules will degrade collectors’ confidence in the industry. Notably, the move wasn’t the result of lobbying from auction houses and took the entire industry by surprise.

• The new rules (or lack thereof) mean that auction houses no longer need to be licensed, disclose guarantees on works, or reveal their fees up front. It also removes limits on “chandelier bidding,” where auctioneers make up new bids to pump up a work’s price.

• Auction lawyers say collectors are willing to pay for works because they think that auction houses are playing by the rules. If they lose that confidence, or if there are no rules for auction houses to play by, the market could be at risk of imploding.

Our Take: This could permanently change New York’s collecting scene.

The art market is already one of the least-regulated asset markets out there. By removing the remaining regulations, the city risks its collectors losing trust in its auction houses and moving elsewhere. Other markets in Europe and Asia are still much more tightly regulated, giving collectors plenty of alternatives.

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Using NFTs to preserve the work of dead artists

• Major artist estates and large museums are experimenting with putting their artists’ work on the blockchain as a means of preserving it. It’s a way to democratize access to great artists, as well as a new revenue stream for these organizations.

• The British Museum has outsourced production of its NFTs to a third party, which then kicks back part of the proceeds. The estate of August Sander, a major 20th century photographer, gave away NFT contact prints, which were then resold on OpenSea.

• Early digital-native artists like Lee Mullican, whose practice involved using computer software, have had their work revived on the blockchain. NFTs of Mullican’s digital work are being sold by his estate, giving these little-known projects a new life.

Our Take: NFTs are the lithographs of the metaverse.

For major museums and estates, NFTs are a new revenue stream at a moment when funding is getting squeezed. They’re also a unique opportunity to share art (some of which has never been seen) with a broader audience. In this way, they’re a lot like lithographs — the high-quality prints available in most museum gift shops. 

Instead of taping a bad poster of Hokusai’s “Great Wave” to your wall, consider acquiring a non-fungible version.

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✨ AROUND THE INTERNET

• Heritage Auctions’s Numismatic sale brought in a whopping $65 million earlier this month. Them’s some expensive coins.

• Colin Kaepernick is set to publish a memoir for young adults in the form of a graphic novel.

• On the heels of ApeCoin’s success, a new startup is trying to help other NFT projects launch their own currencies.

• A Basquiat painting sold at Phillips for $85 million, part of a blockbuster modern and contemporary sale.

• Good news for your weekend: The “Change of Heart” Yu-Gi-Oh card is finally off the game’s banned list.

For old schoolers, the “Change of Heart” card was a major part of the game and the anime.