How Does A Public Museum Collect NFTs In The Absence Of Clear Regulation?
In our latest WAC Weekly we were joined by Delphine Ract Madoux, curator consultant for the Musée Granet (Aix-en-Provence, France) to talk about integrating NFT-based artwork in a national museum collection. We’ve seen some high-profile acquisitions of NFTs by museums lately, with the Centre Pompidou acquiring 8 NFT-based artworks, LACMA acquiring a collection including Cryptopunks and Art Blocks-based artworks, and the Buffalo AKG acquired an NFT as part of their Peer-to-Peer show last year.
The Musée Granet is located in the town of Aix-en-Provence in France. France is in the unique position of having a highly regulated museum sector, but the Ministry of Culture is interested in establishing guidelines for tokens in various cultural sectors and making room for institutions to experiment with NFTs and smart contracts. With that in mind, how was the museum able to use NFTs to its benefit, despite hurdles like not being able to use cryptocurrency?
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Entering NFTs into the public collection
The Sphère Code Cylindre exhibition was initiated by curators Delphine Ract Madoux and Paméla Grimaud, in part to satisfy their own curiosity about this technology and to introduce it to the visitors of a fairly traditional art museum.
A mixture of contemporary and digital artists worked across mediums to respond to the works in the museum’s collection. Each piece in the show has had a corresponding NFT minted on the Tezos blockchain: one of two editions is for the artist to be sold on the Objkt marketplace, and one is for the museum to keep in its collection. Collecting artworks registered on the Blockchain is an ongoing issue, as we’ll discuss, but if successful this would make Musée Granet the first public museum in France to incorporate NFTs into its permanent collection.
The tokens are stored on a wallet set up in partnership with the French hardware wallet company Ledger, but given the museum’s role as a public institution the NFTs, as artworks, should eventually be the property of Aix-en-Provence, with the museum just taking on the role of conserving those tokens.
That will require convincing relevant authorities that these NFTs are compliant with French regulations around the accessioning of art into the public collection. There are no guidelines specific to NFT custodianship in either French law or the museum charter, but as they outline in a report on NFTs in the culture sectors, France’s Ministry of Culture is interested in establishing some as museums get to grips with the technology and its implications.
Audience perception of NFTs in the show
Sphère Code Cylindre is, as Delphine Ract Madoux describes it, a fairly “classical” exhibition with lots of tangible, physical artworks on show. When digital elements appear they’re often part of a physical piece, and the fully digital works together are just one component of the show. Aside from the museum’s own tokens, the NFT component of the show is mostly just a sales mechanism.
Even so, Madoux found that the audience for this show was very segmented with regard to the web3 element. There were visitors who came to the exhibition because they were either web3 enthusiasts or part of the crypto industry, and otherwise weren’t visitors to the museum.
The audience coming in because of the web3 appeal was for the most part a demographic under the under-30s. Otherwise, the exhibition was introducing this technology to their usual audience, who had probably heard of web3 and NFTs in the news but didn’t really understand it. This demographic divide is one that museums exhibiting web3-adjacent work are going to have to navigate for some time.
Exploring the technology further with fractional ownership
It’s still early days for web3 in the arts and culture sector, so more in-depth ideas and practices like fractional or collective ownership of pieces, as a fundraising mechanism or otherwise, seem out of reach. As Anne-Laure Janeczek, project director at the French Ministry of Culture, says:
“the most simple use-case for an institution now is to collect an NFT and digital art with an NFT. It’s the simplest way for NFT projects to be achieved in an institution.”
She also points out that something like shared ownership raises issues with regard to the legal rights around imagery. As the Ministry of Culture writes: “the creation of NFTs associated with public cultural goods or their reproductions should not create exclusive access to these goods or their reproductions for their holders, which would deprive them of any other form of use. … Indeed, the NFT can be seen as a format that does not represent a transfer of the work. It would be like a rare derivative product, like the Louvre’s chalcography productions of prints sold in limited editions or the original bronze editions of the Rodin Museum.”
Processing NFT transfers without crypto
If a museum wants to buy and sell NFT artwork they’ll need a cryptocurrency like ETH or XTZ specific to the blockchain they’re transacting on. This raises several issues for public institutions: for one, the exchange value of those cryptocurrencies can be highly volatile; a museum can’t lose a chunk of its crypto holdings overnight and depending on the country and unrealized capital gains on their purchase of cryptocurrency might have tax implications they don’t want to deal with.
For LACMA, their NFT acquisition was a clear-cut gift to the museum from a donor, so LACMA didn’t need to hold any crypto. But with the tokens being created for the show, how did the museum navigate this without using cryptocurrency?
Under the current regulations, Musée Granet had to arrange for the artists to “donate” an edition of each piece to the museum’s own wallet. In the long term, Madoux wants those NFTs to be considered artworks to be officially entered into the museum’s permanent collection, but that’s going to require them to prove that NFTs could be art objects in and of themselves which can be collected by a public museum.
Getting these tokens into the collection will involve entering them into “national heritage”, which will involve discussions with the regional government and the Ministry of Culture. The current situation with the museum holding donated pieces in its own crypto wallet is a stopgap solution in the absence of any existing regulations.
The value of the two editions
The museum has no intention of selling its NFTs anytime soon since this would be in effect deaccessioning part of its collection, whether or not it’s officially recognized as such at the moment. But the exhibiting artists do want to see their work sold at a good price, does the existence of the museum’s second edition devalue the artists’ editions?
It’s true that on the NFT market, unique “1 of 1”s tend to fetch higher prices at auction. But with the museum’s editions being locked up under deaccessioning rules, there’s no practical way for it to affect the price of the artists’ tokens. (This is the dynamic Brian Frye is referring to when he talks about deaccessioning rules “controlling the supply” of the most valuable artworks.)
If anything, having a certifiable, on-chain association with the museum via its crypto wallet should actually add value to the works. Being among the first NFTs collected by a French institution is a selling point. It’s why different artists or gallerists might try to airdrop their own NFT art into the museum’s wallet in an attempt to boost the value of their own pieces; this kind of airdrop could be a kind of PR stunt by an artist trying to build a brand, or it just is highly-automated spam being carried out by a wash trader. All you’d need is the museum’s “public key”, the address for their wallet, which is visible on any of the Objkt pages for the exhibition NFTs.
As it stands, there’s no way to prevent this from happening. It’s a fundamental issue with most crypto wallets, and it’s one that the museum has been discussing with Objkt and the Tezos Foundation to mitigate against. This could be solved at the level of the wallet (“burning” unwanted NFTs by sending them to a blank address), or at the level of the marketplace, preventing airdrops on its platform according to user permissions. In the long term, it might require an upgrade to the Tezos blockchain itself to accommodate museums.
The existence of two tokens corresponding to the pieces raises the issue of “inalienability”, which Anne-Laure Janaczek tells us is going to be a hurdle for getting the pieces entered into France’s national heritage collection. For an artwork or artifact to be “inalienable”, there can be no mechanism by which the museum could sell it, nor could it be foreclosed upon by creditors. If the object belongs to an individual or foundation, there are rules around how that’s to be managed for the work to enter the collection.
The fact that each NFT held by the museum is one edition of a token being actively traded on-chain is a totally new situation for these rules to run into. While Musée Granet has worked with the Ministry of Culture since last July on this issue, all parties are in agreement that the rules will just have to be tested by this situation.
In their report, one of the Ministry of Culture’s proposals is to “encourage experimentation with NFT-related use cases by public institutions, both in terms of acquiring NFTs and producing NFTs associated with works in their public collections.”
Ultimately, this is a path towards developing “strategic guidelines, together with the stakeholders and coordinated, on the roll-out of a cultural policy for NFTs.” As museums like Musée Granet figure out the implications of different web3 tools, both the technology and guidelines around it will adapt to meet their needs as they become clearer.
WAC Weekly is part of WAC Lab, a new program unleashing the full potential of Web3 for the arts and culture produced by We Are Museums in collaboration with TZ Connect and Blockchain Art Directory, and powered by the Tezos ecosystem.
