#76 | A Titanic Wreckage in NFTs

Estimated Read Time: 9 minutes

Hey friends,

Wonderful to have you joining us today! After last week's "Machi Incident" of 72 Bored Apes, I bet you thought the title was referring to a dip in NFTs—but no, it's referring to the tokenization of the Titanic.

That'll be featured near the end, but we've got another great round-up of the latest Web3 news, featuring Japan’s digital Yen and NBA Top Shot's big securities lawsuit as well as the viral video from an NFT Paris party. Let's jump into it!

The Blockchain Brew Up 🫖

It seems Bitcoin and Ethereum may have lost their momentum over the past week, with both falling red after the U.S. Commerce Department reported that the personal consumption expenditures (PCE) price index climbed by an unexpectedly robust 5.4% in January. Showing signs that investors may have been a bit spooked by inflation, but despite that, Bitcoin's 50-day moving average remains above its 200-day moving average so let's see how the next week pans out. 

It seems we can't go a brew-up without covering yet another country embracing the promise of a blockchain-based monetary system. Last week was The Bank Of Russia piloting a Central Bank Digital Currency (CBDC) for its Ruble and this week saw the Bank of Japan confirming a CBDC pilot phase in April for the Yen, following two years of proof-of-concept testing.

The Japan central bank sees the pilot of a digital Yen as a first step towards finding a design that addresses the needs of users, stakeholders, and society. “A method of payment is not something that becomes the norm once an ideal arrangement is brought into the world,” said Executive Director Uchida Shinichi. 

Although the eventual decision may require a national referendum, the April pilot has two goals, firstly to trial the technical feasibility of integration with banks and intermediary networks for the end-to-end flow of payments, and secondly to engage with the private sector payment providers to identify and iron out any challenges from a CBDC. This fairly “recent” technology of the blockchain is home to many uses, from sports cards and artifacts (as we will soon cover), to the prospect of currencies for entire countries, with the seemingly endless amount of progressive developments happening every week and the backing of entire governments like Japan, it's hard to imagine a future that's not on the chain.

Steaming Headlines ♨️

NBA Top Shot NFTs Spark Federal Securities Debate

The National Basketball Association was one of the first mainstream entities to embrace NFTs back in 2021, when they launched next-generation collectible sports cards of basketball highlights called Moments in partnership with Dapper Labs. Since then, NBA Top Shot has surpassed over $1 billion in sales and onboarded waves of fans into Web3. These blockchain-based trading cards can be purchased through randomly assigned packs, or traded on the secondary market as lucrative investments, but that's where the trouble comes in.

Dapper Labs has been sued by a buyer of the NFTs who alleged that the creator’s failure to register them with the Securities and Exchange Commission (SEC) had harmed her and other buyers, which US District Court Judge Victor Marrero now allowing the lawsuit to move forward as they may indeed be securities.

The “are NFTs securities” debate has plagued many projects, with holders often perceiving their NFTs as investments in certain ventures. By definition, securities are tradable financial assets like stocks, bonds and options; and in turn, are subject to strict regulations with a whole government agency (U.S. Securities and Exchange Commission) created to monitor the space in the aftermath of the 1929 Wall Street Crash. 

For an emerging technology like NFTs which pretty much has free reign at the moment, subjecting them to the same rules and regulations as stocks has the potential to hurt projects and make life a bit harder, with the likes of OpenSea outright banning projects it thinks are securities in order to avoid the hassle of being subject to the eyes of the SEC. Securities are determined by the SEC using the “Howey Test”, which categorizes them if they are an "investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others", bringing us back to the NBA Top Shot lawsuit where the court judge indicated that through this Howey Test, these NFTs could indeed be securities. 

Dapper Labs was denied the request to dismiss the suit, but they remain confident saying “Courts have repeatedly held that consumer goods – including art and collectibles like basketball cards – are not “securities” under federal law. We’re confident the same holds true for Moments and other collectibles, digital or otherwise”. Although not a final ruling, we highlight this recent development because of the notoriety of the NBA and the popularity of Top Shot NFTs, a lawsuit of this scale has the potential to bring many eyes and questions to Web3. The ramifications of this “are these NFTs securities” from the SEC and Court system will set a precedent for our wider NFT space, for better or for worse.

The Titanic Tokenized

Rounding off with yet another way that NFTs are pushing the boundaries of what's possible by these “JPEGs”, the Titanic ship that sunk over 110 years ago is about to be introduced to the modern era of Web3 through tokenized NFTs. In collaboration with RMS Titanic (RMST) which holds exclusive salvage rights over the wreck, Smart Financial Holdings, and Web3 firm Artifact Labs, physical artifacts retrieved from the wreckage of the Titanic are set to become tokenized as NFTs with the aim of preserving the artifacts while sharing ownership with the public. 

In the RMST press release they stated "This creative project will place the legacy of the Titanic in the hands of the global public by preserving assets from the ocean liner as immutable NFTs… We are determined to ensure that the Ship's artifacts are preserved in perpetuity and accessible to future generations. We believe that moving into the digital space allows us to reach a broader audience”. 

Artifact Labs aims to tokenize 5,500 physical recovered artifacts, along with more that may be recovered in the future. The company will also launch the Titanic DAO, through which members can participate in future initiatives that help fund ongoing research, recovery, preservation, exhibition, and licensing of RMST’s assets. I definitely didn't have Titanic wreckage artifacts on my 2023 NFT use case bingo card, but no doubt this is an interesting initiative where not only does the RMST have a new avenue for “capital raising” the preservation of the Titanic, but have a more connected way to decentralise ownership with people around the world and broaden the opportunities available to its organisation. 

Thanks for your support! We hope you enjoyed today’s Morning NFTea, but until we curate the next edition have a great couple of days. Take care! 

What's the NFTea? 🍵

If you've been on NFT Twitter at all this week, then you've seen that video from NFT Paris. Yeah, I'm talking about this video. 

The 'Midnight in Paris' party hosted by DeGods and Pudgy Penguins turned into a lively dancing mosh pit where one NFT holder wiggled his way into viral internet fame (well, in the NFT sphere but it still counts).

There were a few immediate reactions:1. What horrible dancing2. There are no girls, it's all a sausage fest 3. It's disgusting to drink out of a shoe4. DeGods has built a frat boy culture

That being said, each community has its own sub-culture and this video exemplifies the almost cult following that their founder Frank has built.

Thankfully, calmer heads prevailed and sentiment has slowly transitioned into being appreciative of how everyone seems to be having a good time at the event.

Frank and the official DeGods account have responded to the negative sentiment in stride as well: 

Which has been met with praise from the NFT sphere at large.

After all, NFTs are such a diverse space that there's room for everyone.

Connect with us on socials for a more personal experience! 👇

Twitter: @MorningNFTeaOur Team: @BuckyGang | @Wickyy.eth | @subvertDiscord: Morning NFTea

DISCLAIMER: 

None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.