Sotheby’s accepts bitcoin and ether for an upcoming auction of a Banksy painting
Sotheby’s announced Tuesday that it will accept bitcoin and ether in an upcoming auction from Banksy’s “Love is in The Air”.
According to Sotheby’s, it is the first time that a major auction house has accepted the two cryptocurrencies as a means of payment for a physical work of art. The winner can also pay in US dollars.
“What better combination to introduce crypto than an iconic Banksy painting,” said Charles Stewart, CEO of Sotheby’s, on CNBC’s “Squawk Box” on Tuesday.
Sotheby’s recent entry into the world of digital assets comes through a partnership with the cryptocurrency exchange Coinbase, which went public in April. Sotheby’s first foray took place last month when the auction house was selling non-fungible tokens or NFTs created by digital artist Pak.
Banksy’s “Love is in The Air” is one of the most famous works by the British street artist, whose real name is unknown. The auction is scheduled for May 12th. Stewart said the bids are valued at between $ 3 million and $ 5 million.
Gallery assistants customize “Love is in the Air” by British graffiti artist Banksy before it goes on sale in London on June 24, 2013.
Justin Tallis | AFP | Getty Images
“It may well be that the winner of this painting will pay in dollars and not in crypto, but I think it is interesting for us to create the opportunity for that,” said Stewart. “There is clearly a large audience out there that is interested in the NFT aesthetic and the opportunity there. Why shouldn’t that extend to the world of physical art? It will be very interesting to see.”
On his three-day sale of Paks NFTs, Stewart said Sotheby’s had seen over 3,000 buyers. In total, the collection sold for $ 16.8 million. “We’re definitely seeing a large – and mostly new – audience from a Sotheby’s perspective,” said Stewart.
In March, Christie’s became the first major auction house to sell an NFT, which is blockchain-based assets that are unique in design. Digital artist Beeple’s work has sold for nearly $ 70 million. Christie’s accepted airwaves as payment for this Beeple auction.
According to CoinMarketCap.com, Bitcoin is the world’s largest cryptocurrency by market value, trading at just over $ 1 trillion on Tuesday morning. Ether – which runs on Ethereum’s blockchain network – is the second largest cryptocurrency with a market value of more than $ 400 billion.
If the winner pays for the Bansky painting with either Bitcoin or ether, CNBC’s Andrew Ross Sorkin asked if Sotheby’s plans to hold the cryptocurrency or convert it to US dollars immediately.
“We have an arrangement with the owner of the painting, the shipper of the painting, so it is ultimately up to you,” Stewart replied. “Part of the partnership with Coinbase gives us not only the ability to process the payment, but that ability as well.”
Tuesday’s announcement by Sotheby’s, which was founded in 1744, marks yet another institutional takeover for cryptocurrencies.
Mastercard announced earlier this year that it would support certain cryptocurrencies on its network, while major Wall Street banks Morgan Stanley and Goldman Sachs took steps to offer exposure to Bitcoin to their respective wealth management clients.
Other companies like Tesla and Square have bought Bitcoin to help keep their balance sheets. Tesla also started accepting Bitcoin as a means of payment for its electric vehicles.
Using Bitcoin for purchases has significant tax implications due to its classification with the Internal Revenue Service.
The IRS considers Bitcoin real estate, so spending Bitcoin is essentially considered the same as selling it. This means that a person paying for an item or service in Bitcoin may owe capital gains taxes at the time of ownership transfer if the value of Bitcoin is greater than when they originally acquired it.
Bitcoin traded just under $ 56,000 per token on Tuesday, which is a year-to-date gain of more than 90%, according to Coindesk. Ether traded just below $ 3,500 on Tuesday, slightly below the all-time high it hit earlier in the day. Ether has rallied more than 360% so far in 2021.