Phillips courts bitcoin tycoons for Banksy painting at upcoming Hong Kong auction

·4-min read

Auction house Phillips said that newly minted cryptocurrency millionaires may bid for an artwork by the mysterious England-based street artist Banksy, estimated at between US$2.8 million and US$4.1 million, when it goes on auction in Hong Kong on Tuesday.

While the bidding will be conducted in Hong Kong dollars, the winning buyer can also choose to pay using bitcoin or ether for Laugh Now Panel A, which features a forlorn monkey wearing a sandwich board with the slogan “Laugh now, but one day we’ll be in charge”.

“Over the past few years many have made fortunes in cryptocurrency and so it was only a matter of time before cryptocurrency starts to be used as a payment method for art and other collectibles,” said Jonathan Crockett, chairman of Phillips Asia, adding that his team had been “inundated with questions as to whether we will start offering this service”.

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Bitcoin, the world’s oldest cryptocurrency, has appreciated nearly 10 times since January 2019 when it stood at US$3,880. On Sunday, it was trading at US$36,200, a decline of more than 40 per cent since mid-April when it crossed over US$61,200. The volatility in bitcoin prices has been exacerbated in recent days because of an impending crackdown on bitcoin mining in China and a series of tweets from Tesla CEO Elon Musk, hinting at a potential split with the cryptocurrency.

Many central banks around the world do not consider bitcoin as a means of payment. In March, US Federal Reserve chairman Jerome Powell said that bitcoin is “a speculative store of value like gold” and lacks key ingredients that would make it a useful currency. “They’re not backed by anything. They’re more of an asset for speculation,” he said.

But the potential of bitcoin as a store of value is being helped by auction houses’ moves to open up their bidding to cryptocurrency holders.

Phillips’ decision to accept cryptocurrencies comes after Sotheby’s move last month. The New York-headquartered auction house said it would accept payment in bitcoin and ether for Banksy’s “Love is in the Air” oil and spray painting on canvas. The artwork sold for US$12.9 million, far exceeding its original estimate of US$3 million to US$5 million.

Sotheby’s, however, declined to confirm if the successful buyer made the payment in bitcoin.

For “Laugh Now Panel A”, the present owner is receptive to accepting cryptocurrency to open up the bidding to a new pool of prospective buyers, and potentially achieve a higher sale price, Crockett said.

Banksy's ‘Love is in the Air’ sold for US$12.9 million last month, much more than its original estimate of US$3 million to US$5 million. Photo: Handout
Banksy's ‘Love is in the Air’ sold for US$12.9 million last month, much more than its original estimate of US$3 million to US$5 million. Photo: Handout

The exchange rate will be referenced from US cryptocurrency exchange Coinbase on the day of the auction, with the seller bearing the Hong Kong dollar to bitcoin volatility risk, he added.

“Cryptocurrency volatility is a known fact,” said Crockett, hinting at the current downturn in prices. “But there is also a potential upside if the market swings the other way.”

Global sales of art and antiques reached an estimated US$50.1 billion last year, a 22 per cent decline from 2019, according to UBS’s annual global art market report 2021, which is published together with Art Basel. It was the second straight year of decline as the Covid-19 pandemic grounded travel, curtailed art shows and art sales, the report said.

Auction houses are increasingly looking to accept bitcoin as payment as they look to tap business from this segment of newly minted cryptocurrency millionaires, said Olivier Marian, co-founder of Arteïa, a Swiss start-up that specialises in creating digital CVs for artists to prove the provenance of their work.

“With the gains seen in bitcoin and ethereum over the past one year, some investors have made huge amounts of money in cryptocurrencies,” said Marian. “For a long time these millionaires have been looking at ways to spend their virtual currency in the real world.”

However, some bitcoin investors may be reluctant to convert their holdings back to physical money due to tax reasons, and so they are spending their wealth where the cryptocurrency is accepted, he said.

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