Warsaw Stock Exchange wants to tokenize physical art. But not with NFTs

Polish investors will be able to acquire a fraction of high-value artworks in the form of fungible tokens sold by the Warsaw Stock Exchange.

The Warsaw Stock Exchange (WSE), the largest financial institution of its kind in Central and Eastern Europe, will issue fungible tokens representing ownership of physical artworks. The initiative will launch in partnership with artinfo.pl, a Polish art market platform.

A Warsaw Stock Exchange representative declined to disclose the blockchain the project would live on. The initial batch of artworks to be tokenized, as well as the launch date, are also kept secret. At the same time, the WSE claimed they have already worked out the legal side of things and began work on the technology. The first tokenized assets could become available near the end of the year.

Entering the art market for a NYC lunch price

The WSE hopes to encourage retail investors to enter the art market as they intend to make high-value artworks more accessible. The minimum value for pieces participating in the program is said to be 1 million PLN, or $215,000, but the average is expected to be even higher. Investors will be able to acquire tokens for as little as 100 PLN, or $21.

Purchasing the full token supply, effectively taking the artwork off the market, is not out of the question, either, but keeping the artwork on the WSE’s platform will improve its liquidity and exposure, the WSE assesses. To participate, investors will need to complete KYC checks and abide by standard TradFi regulations, including EU anti-money laundering laws.

The Warsaw Stock Exchange’s project will most likely only accept the Polish zloty, excluding any digital assets.

Smells like DAO

Tokens will be available for purchase at launch as well as on the secondary market. Apart from ownership, they will grant holders voting rights in the decision making process concerning the fate of the artwork.

The community could, for instance, decide to exhibit the piece at a museum or gallery for a wider audience to enjoy. By default, the Warsaw Stock Exchange will provide museum-standard facilities for storage purposes.

A first for a stock exchange, but not for crypto

The Warsaw Stock Exchange is the first institution of its kind to enter the relatively new territory of physical asset tokenization, but the idea itself is not new. Sygnum, a Zurich-based crypto bank, has successfully fractionalized the ownership of Pablo Picasso’s Fillette au béret, and in Lichtenstein, where a dedicated regulation allows financial institutions to issue tokens that can carry any type of rights, VP Bank has entered the field by tokenizing an undisclosed postwar painting and a vintage Audemars Piguet watch.