January 19, 2022

The Least of Crypto's Legal Worries

Artists like Kane have worked to ensure that many of the smart contracts controlling NFT sales contain provisions for artist royalties. In the analog art world, an artist gets paid when they sell a painting to a collector, with their gallerist taking a cut as large as 50 percent. After that first sale, even if the value of the painting has appreciated a hundredfold, the artist gets nothing when the collector resells it. Remedying this perceived injustice, NFT contracts now often provide for artists to automatically receive a 10 percent royalty for any and all secondary sales.

“Royalties allow artists to participate in their own success,” says Kane, “and that’s the way it should be.” This idea is much older than the crypto art movement. Individual American artists and advocacy groups have been trying to write royalty provisions into their contracts since at least 1940, when American Gothic painter Grant Wood announced that he would only sell paintings with the stipulation that he get half of any appreciated value upon resale. Such private agreements have had little success, though.

Having done well by the blockchain, Kane is understandably skeptical about government regulation of NFTs. “There’s grown to be a community consensus that artists are entitled to royalties, and community consensus is more enforceable than laws in some ways,” he says. “We’re all participating in this new system that’s more concerned with the benefit of the many over the profit of the few. And that’s the spirit of crypto.”