What are NFTs?
Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.
You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”
However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.
This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”
This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.
Would you spend $2.5 million buying somebody else’s tweet? Of course you wouldn’t, but there are investors vying to do just that.
Or would you blow almost $400,000 on a piece of video art lasting less than a minute that anyone can view on Instagram? No you would not, but people do.
If you think the investment world has gone crazy, with the frenzy over US video game retailer GameStop and dog-meme crypto Dogecoin, the latest hot trend will only confirm your suspicions.
Welcome to the world of non-fungible tokens (NFTs), where people are willing to spend more than $200,000 on an online video clip showing a great moment in NBA basketball history. A moment that anybody can view on the web, but you get to “own”.
It sounds daft today, but in a few months time you might be clamouring to buy NFTs, too. Either that or feeling smug as the craze turns out to be yet another of the bubbles afflicting today’s overheated bull market.
You don’t want to be close-minded, though. You didn't get Bitcoin at first, but kind of wish you did now.
So what exactly are NFTs?
First that word fungible. Wikipedia states: “In economics, fungibility is the property of a good or a commodity whose individual units are essentially interchangeable, and each of its parts is indistinguishable.”
Non-fungible tokens are the opposite of interchangeable.
They are digital assets that exist on the blockchain, sometimes called digital passports as “each token contains a unique, non-transferable identity which distinguishes it from other tokens”, says Ivan Soto-Wright, chief executive and founder of crypto payment solution firm MoonPay.
This is the big attraction. “The singularity of each token makes them easy to verify and can drive certain tokens to be highly sought after,” he adds.
They offer a unique guarantee of authenticity as they cannot be copied, stolen or replicated. You bought it, you own it. You can sell it, too.
NFTs are created on smart contract platforms such as Ethereum, Mr Soto-Wright says. “They use cryptographically verified information to ‘lock’ and secure a particular asset, which can be bought or sold, but never replicated.”
You just knew cryptos would be involved at some point, didn’t you?
You can trade them like any collectible or valuable, but understanding which NFTs are likely to retain value and anticipating future trends, will be challenging
As a result, you can own, for example, art, music and images – or, as shown by the success of NBA Top Shops, a slam-dunk moment in basketball history.
If you are struggling to understand how or why people would do this, then picture the more familiar world of collectibles. Instead of a John Lennon doodle or Elton John’s unused toaster, you are buying digital art or memorabilia.
Mr Soto-Wright says digital ownership allows buyers to establish and enforce their property rights, and the principle can even apply to physical goods.
It can also help create a secure secondary marketplace for trading digital goods, which is where the investment opportunities may lie.
Artists have been early adopters. Canadian singer and musician Grimes recently auctioned off around $6m worth of NFT-based digital artworks at an auction.
Her most expensive piece, which sold for a thumping $389,000, was a video called Death of the Old, showing a ruined castle, floating "WarNymphs", a cross and ethereal light, set to an original song by Grimes.
Electronic musician 3LAU was reported to have made more than $11m in a weekend by selling albums and other goods as NFTs.
Nashville rock group Kings of Leon made $2 million by selling Ethereum-based NFTs alongside their latest album When You See Yourself.
The band's “drop” included tokenised versions of the album featuring a limited-edition vinyl release and exclusive digital artwork. Unsold editions were burned to add to the scarcity of those sold. None of this can be reproduced later, so over time its value could rise, assuming other collectors want to buy it.
Digital artist Beeple sold $3.5m worth of art through Nifty Gateway last year. His work Everydays: The First 5000 Days became the first purely digital work to be sold by a major auction house, Christie's. Bidding closed at $69.3 million, which is a lot of money to pay for a JPEG.
Robert Norton, chief executive of Verisart, says the advantage for the artist is that NFTs can help distribute royalties fairly and in more direct ways. “They can be configured to pay an artist, say, a percentage every time their work is sold. Buying NFTs can directly reward creators you admire and appreciate.”
As with cryptocurrencies, Mr Norton says there are potential benefits to being an early adopter and acquiring works early but he cautions: “To buy art purely for its monetary value misses the point of enjoying art for its own sake.”
He also warns that NFTs are still in the “Wild West phase” with plenty of speculative activity. “Buy what you like or what you believe is significant, rather than to resell at a profit.”
Verisart helps artists create professional certificates of authenticity and Mr Norton says buyers should always check the creative authenticity behind any NFT they buy.
He says anything digital can be turned into an NFT, and companies are looking at applying them to physical art and collectibles as well. “After the initial frenzy subsides, the need to ensure legitimacy and scarcity mean this technology isn’t going away,” he says.
Tom Stelzer, cryptocurrency specialist at personal finance comparison site Finder.com, says NFTs can democratise the art market, making it easy for artists to connect directly with collectors and buyers, and cut out the need for gatekeepers or middlemen.
"They also have potentially revolutionary applications for things like ticketing and video games, especially games built around collectibles.”
It is important to note that NFTs are not the digital artwork or media itself, but a tokenised record of ownership recorded on the blockchain. “You can trade them like any collectible or valuable, but understanding which NFTs are likely to retain value and anticipating future trends, will be challenging.”
He adds a word of caution: “While the blockchain reduces the likelihood of fraud or forgery, this is still an unregulated market. Whether buying an NFT confers genuine legal ownership of the underlying asset is still a grey area.”
Another concern is that the market is relatively illiquid, and the pool of buyers remains small. “If demand for NFTs dissipates, investors may find themselves stuck with an item for which they can’t find a buyer.”
Early adopters can be winners, such as those who bought early NFT project CryptoPunks, 10,000 unique collectible characters with proof of ownership stored on the ethereum blockchain. “It has generated millions in sales this year alone, even though CryptoPunk characters could be claimed for free when launched in 2017,” Mr Seltzer says.
NFT investors can trade on popular market places such as OpenSea, Rarible and Atomic Assets, which had combined trading values of £340m ($474.6) at the end of February, Vijay Valecha, chief investment officer at Century Financial in Dubai, says.
"While you can buy NFTs with regular money, such as dollars and euros, current interest is tied up with the crypto boom, with most transactions through existing Ethereum holdings.”
The big question is why would someone be willing to pay millions of dollars for a virtual asset?
Some people are buying into brands they love, and artists and celebrities they admire. As in the case of that $2.5m tweet, which was sent in 2006 by Twitter founder Jack Dorsey. Bidding ends on March 21 and the proceeds will go to Give Directly’s Africa Response fund.
His tweet will remain viewable on the internet for free, assuming Twitter or Mr Dorsey do not remove it.
NFTs offer businesses exciting opportunities, allowing major brands to auction upcoming products, Mr Valecha says. “When rolling out a new product, a company like Apple might invite bids to be the first buyer. The owner can proudly claim to hold the virtual rights to such a precious asset.”
While early adopters may benefit from leaping into futuristic technologies, most should stand well clear, "unless they really understand the underlying market”, he adds.
So what does Mr Dorsey’s tweet say? “just setting up my twttr”. Is that worth $2.5m of anybody’s money? Admittedly, it's the first published tweet on Twitter, but time will tell.
SM Town Live is on Friday, April 6 at Autism Rocks Arena, Dubai. Tickets are Dh375 at www.platinumlist.net
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
The Details
Article 15
Produced by: Carnival Cinemas, Zee Studios
Directed by: Anubhav Sinha
Starring: Ayushmann Khurrana, Kumud Mishra, Manoj Pahwa, Sayani Gupta, Zeeshan Ayyub
Our rating: 4/5
Ticket prices
General admission Dh295 (under-three free)
Buy a four-person Family & Friends ticket and pay for only three tickets, so the fourth family member is free
Buy tickets at: wbworldabudhabi.com/en/tickets
Scoreline
Syria 1-1 Australia
Syria Al Somah 85'
Australia Kruse 40'
Like a Fading Shadow
Antonio Muñoz Molina
Translated from the Spanish by Camilo A. Ramirez
Tuskar Rock Press (pp. 310)
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
What are NFTs?
Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.
You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”
However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.
This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”
This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.
