Indian Artists May Be the Biggest Losers When Cryptocurrencies Are Banned in India
NFTs have become a hot trend in art, pop culture, and business. NFT’s are digital certificates of ownership, recorded on distributed ledgers or blockchains issued to certify a piece of digital artwork. Artists are the ones who made the most out of this opportunity till now, though the music world is quickly catching up.
Indian artists have started slowly moving into the NFT scene. Even though there haven’t been bigger sales like Beeple who made around $69 million or Crypto punks which collected $7.6 million, Indian artists have also started making good money.
Some of the NFT sales made by Indian artists (courtesy: Hindu newspaper):
- Delhi-based animator and art director Amrit Pal Singh sold two pieces on Foundation for 15 ETH (roughly ₹18 lakh)
- Chennai-based Siraj Hassan has sold 27 works from his Caged series — miniatures trees, human figures encased in glass bell cloches.
How NFT is beneficial to artists:
There are a lot of benefits NFTs bring to artists other than the obvious monetary benefits they get.
- Buying is new liking: Other than putting up their digital artworks on Instagram or online and getting indirectly paid, artists can now make money by selling them as NFT. In the NFT era, people show their love for artists or artwork by buying it rather than liking it.
- Royalty: Every repurchase of the artwork can provide the artist a percentage of sales as royalty and it is usually molded into the NFT contract, meaning they didn’t even have to follow up to get the money.
- Digital art as a collectible: With NFT, digital arts are becoming collectible and will enjoy equal status as canvas-based artwork.
- Moving to products from service: Most digital artists earn money by selling their talent as service and many times they don’t have full control over what they produce. With NFT’s they can freely create and sell artwork as a product in the market.
Indian ban on cryptocurrencies and its impact on an artist
Based on a Reuters article, the Indian government is planning to have a complete ban on private cryptocurrencies and transactions. Below is an extract from a Reuters' article:
India will propose a law banning cryptocurrencies, fining anyone trading in the country or even holding such digital assets, a senior government official told Reuters in a potential blow to millions of investors piling into the red-hot asset class.
The bill, one of the world’s strictest policies against cryptocurrencies, would criminalise possession, issuance, mining, trading and transferring crypto-assets, said the official, who has direct knowledge of the plan. — Reuters
Even though there are no confirmations on what all transactions will be covered in the ban, the NFT transactions are likely going to get impacted since they can be tagged as a crypto-asset.
NFTs reside in blockchains and sales are facilitated by Cryptocurrency, mostly Etherium. Now, once Etherium and bitcoin transactions are made illegal, that would mean that artists won’t be able to sell their work in most of the NFT market places.
It’s not only the association of cryptocurrencies that makes NFT a gray area, NFT also doubles down as a collectible item and hence can be considered as storage of money or as an asset. So any kind of indirect storage of money on a private blockchain might also get covered under the cryptocurrency ban.
The only way NFT can remain legal once private currencies are banned is if NFT gets called out specifically on the government bill to be exempted. But based on current information available online, there are no such exemptions.
Need for regulating NFT than outright banning it.
NFT is not a direct currency item and hence is a contender to be excluded from the Indian government's cryptocurrency bill. It can be considered as a special asset or classified under collectibles and can be regulated.
There is definitely a need for regulation to provide more transparency into transactions and to ensure that proper taxes are being paid and money isn't getting laundered.
India is also setting a precedent by banning cryptocurrencies and once a ban is in place and properly enforced, many countries may follow the same path. So whatever is done in India will have a major impact on the future of cryptocurrencies and NFT’s.
NFT provides multiple benefits to digital creates, artists, and musicians. So considering a blanket ban can impact the art community very badly. Hope within the digital art community in India is that NFT might get excluded and just be regulated. Only once the bill is public and later implemented, we will get more clarity.