After the milestone of 2021 selling individual things via non-fungible tokens (NFTs), 2022 is gearing up to be the year of MetaFi. It doesn’t seem necessary to make a summary of Beeple, Christie’s, Visa, and the endless celebs getting together, except that we seem to have (or may have already crossed) a fundamental chasm. While the skyrocketing price of NFT will not last forever, many have predicted that a mature technical team for the discovery, evaluation, valuation, trading and protection of digital asset groups will appear smoothly soon.
But these optimistic moves may shorten the region. The core of the NFT-Fi sector is value creation through liquidity, but it remains an unspoken assumption that this liquidity will be limited primarily by the cryptocurrency world itself. While it’s still early days, these boundaries may be blurred and we may all need to open our identification holes wider. In this context, Switzerland stands out among the many countries that are just beginning to experiment with central bank-backed digital currencies (CBDCs). The Union of Cantons, home of Davos and Art Basel, is known for its rich history of innovation in both creative and economic origins, and these movements deserve close watch.
Late last year, Six Digital Exchange (SDX), the digital division of SIX Group, the financial company that runs infrastructure for the Swiss National Exchange, was considering opening its exchange to NFTs. This potential step is related to progress in a major trial with CBDC. Together, these first steps will provide credibility and support for both digital currencies and the NFT secondary market, while integrating many types of digital holdings more closely into the Swiss financial structure itself.
To say that international regulation of tokenized assets is still in its infancy or is not well understood would be an understatement. Legal uncertainty, unscrupulous players, technology glitches, public panic, and more can all undermine the smooth functioning of digital markets, potentially with multiplier effects in traditional markets exacerbated by their growing confusion. Recent concerns about the identity of the creators of Bored Apes, as well as the multi-billion dollar Bitfinex hack discoveries, suggest that there is already a massive effort to calibrate privacy and public disclosure needs.
As Web3 enters a region of blurring the line not only between physical and digital commodities, but also between private and public exchanges, it is important to consider how legal frameworks (and the path of least resistance through them) shape a similar version of that world that is the future of cryptocurrency. Hope to replace.
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Fighting these questions is beyond the scope of a short essay. But in this discussion, we will briefly highlight the issue of digital privacy as a link between art, law, and economics. Based on tactics developed in Switzerland that coincided with the rise of global finance in the 19th century, art became a major vehicle for moving assets across the shadows and borders of international law. This backdrop, poorly understood by those outside the art industry, provides a crucial context for the looming struggle between international privacy laws, global digital art and the promise of a publicly verifiable blockchain.
The looming clash between public control and digital privacy
Regulators have been busy filling in the gaps revealed by the astonishing acceptance or, in the case of Switzerland, the legalization of token assets. But of course, any ambiguity in enforcement will eventually undermine the smooth functioning of tokenized markets, with a potential multiplier effect in traditional global markets.
Any renewed public policy to balance the public interest with individual privacy can have ripple effects on investors, auction houses and art collectors. The General Data Protection Regulation (GDPR), one of the toughest privacy laws in the world, has rapidly evolved into a global scheme to use fines as a way to exacerbate the pain of abuse. However, records show that privacy violations are still ubiquitous on a global scale. Penalties for violating EU privacy laws have increased nearly sevenfold over the past year. Data protection authorities have imposed $1.25 billion in fines for GDPR violations since the beginning of 2021, up from about $180 million the previous year.