NFT art, industrial boom in Israel
The NFT (non-fungible token) art field is gaining momentum in Israel. Last month, the Tel Aviv Museum of Art showed an exhibition titled “NFT> One of a Kinds.” Alongside discovering the 40 artworks on display, visitors were invited to scan a QR code that invited them to also experience the exhibition virtually on their phones with explanations of the various artworks. A few days after the launch, three of the exhibiting designers secretly replaced the QR code with another, replacing the virtual works with a text complaining about the low cyber security measures the museum had allegedly used.
The digital protest of the three designers touched on the very essence of NFT – digital files recorded by an e-commerce network (blockchain). The idea is that the technology used to register these files of artwork enables reliable identification of the source, thereby making the artworks unique, with a distinct owner.
A number of Israeli groups and communities thrive on Facebook, WhatsApp, Twitter and especially Discord. A number of private websites provide information and services in this field. It is an Israeli art gallery specializing in NFT. Last year, the Knesset issued an NFT of the original draft of the presidential oath. It was then offered to then-President-elect Isaac Herzog ahead of his inauguration. Also in 2021, a first NFT conference was organized by Shenkar School of Engineering, Design and Art. A first NFT art auction in Israel took place last May.
Similarly, Israeli commercial entities have become involved in the field, such as the Landover cafe chain, which this year launched the first commercial NFT in Israel, “eight NFT images of its iconic dish – Rozalach”, which sold out within minutes and are now found on sale for sums in the tens or even hundreds of thousands of dollars. While this community and business activity has just started, it is already quite dynamic.
Nevertheless, since this field is quite new in Israel, the legal framework is not so clear. A couple of months ago, for example, a report revealed attempts to sell images that are simulations of the stones in the Western Wall, based on NFT technology. The case is now in court following a temporary injunction granted at the request of the state until the issue is resolved.
According to Jaguar A. Gal, attorney and CEO of JAGuar Reg&Comp specialized in this field, there are currently very few legal decisions in Israel on the subject. She emphasizes the need for rules, laws and regulations in this field in Israel.
Gal explains that money launderers, tax evaders and copyright violators can use the partial lack of legal clarity in Israel and avoid punishment. More so, many creative Israelis in this field base their activity abroad, in some cases in countries that, in her definition, function as “regular homes”. In this regard, she notes, the EU is promoting a legislative proposal to regulate the cryptographic asset field, called Markets in Crypto-Assets.
Gal advises Israeli regulators to take an active role in the NFT field on three fronts: at home, against local entrepreneurs; outwardly, against foreign entrepreneurs marketing to Israeli consumers; and create regulatory cooperation between Israel and other countries to regulate activities in which Israeli NFT actors are involved around the world. The legal system, she says, must provide clarity and, if necessary, necessary legal assistance for various facets, situations and errors that may arise in Israel to local users in their use of NFT technology.
