In an interview with The Block, Caroline Taylor, the founder of the bureau, said that collectible tokens should be judged according to more criteria than the usual, physical pieces of art.
“NFT is a completely different beast compared to traditional art. A lot of thoughts about the possibilities of using NFT arise because you feel: tokens have useful functionality. It’s not just a collector’s item”.
Taylor explained that when appraising a traditional work of art, the first question any professional has is, “What is the purpose of the appraisal?” If it is done for an insurance policy, it will be a high price; if the appraisal is for a tax write-off, the price will be lower. The expert added that traditional works of art are appraised for beauty, collectible rarity and provenance, whereas an NFT appraisal brings a number of new factors to the analysis.
Some NFTs have a built-in utility to, for example, defeat a video game boss or grant access to a country club in the real world. And others provide ownership of underlying assets, such as copyrights to a work of art.
Further complicating matters is that NFTs are traded on blockchain networks that exhibit volatility. The price of the cryptocurrency Etherium, on which most NFTs are based, has fluctuated wildly over the past year.
“That’s why appraisers track more than 10 data parameters every day. Because tokens are based on blockchains, they depend on the value of the digital currency”, Taylor explains.
The founder of Arrasealbureac says appraisers compile a detailed report showing how much collectors have paid for similar NFTs in recent years. Some unscrupulous practices from the art world are spilling over into the NFT sector, so the collectible token market is becoming less and less transparent. As a result, more and more money laundering is occurring in this market. Not surprisingly, authorities are concerned about this growing trend, says Taylor.
In February, the U.S. Treasury Department called for regulation of high-value art on the NFT market. The oversight body believes that privacy and simplified logistics through tokenization will lead to an increase in money laundering through NFTs.