In this week’s newsletter, read about Galaxy Digital using a nonfungible token (NFT) of a historic violin to secure a loan and how NFT sales volume plummeted in May. Check out what the United States Treasury Department thinks about NFTs and how Bitcoin NFTs reached a new milestone. In other news, Dapper Labs CEO Roham Gharegozlou claims that NFTs are not securities after reaching a settlement on the NBA Top Shot Moments lawsuit. 

Galaxy Digital uses historic violin NFT to secure loan

Michael Novogratz’s Galaxy Digital and Animoca Brands co-founder Yat Siu tokenized a 300-year-old violin as collateral for a loan. Galaxy lent Siu an undisclosed amount, and to secure the loan, the Animoca executive used an NFT of the historic Stradivarius violin and the physical asset as collateral.

The violin was once owned by the Russian Empress Catherine the Great. Musical instrument auction house Tarisio traced the violin’s origins back over 300 years. Siu acquired the violin in a 2023 auction for $9 million.

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NFT sales volume tumbles 54% in May: CryptoSlam

NFT sales showed a downturn in May despite a recent uptick in April. According to CryptoSlam, NFTs had a sales volume of over $1 billion in April. However, the volume dropped to $624 million in May, marking a 54% month-on-month drop.

Bitcoin-based NFTs recorded a 68% drop in sales in May. Other top NFT blockchains, such as Solana and Ethereum, also recorded downward trends. Solana-based collectibles had a 48% drop, while Ethereum NFTs dropped 55%.

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U.S. Treasury report outlines potential financial risks of NFTs

The United States Treasury Department released a risk assessment for NFTs to provide insight for regulators. The department highlighted several security concerns, including the potential for terrorists to finance operations using NFTs.

Apart from terrorist financing, the Treasury also said that state actors could use NFTs to fund nuclear proliferation and conduct money laundering. Furthermore, the government agency said there are risks to investors who may be subjected to rug pulls and theft.

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Bitcoin NFTs hit $4 billion in all-time sales volume

NFTs based on the Bitcoin blockchain recorded an all-time sales volume of $4 billion. NFT tracker CryptoSlam data showed on June 4 that Bitcoin-based NFTs have had a $3.97 billion all-time volume and a wash volume of $82 million.

Bitcoin-based digital collectibles also recorded a sales volume of $171 million, taking the top spot in the last 30 days. Meanwhile, Ethereum-based collectibles only had a sales volume of $159 million last month.

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Dapper Labs’ $4 million settlement reaffirms NBA NFTs aren’t securities: CEO

Dapper Labs, the firm behind NBA Top Shot Moments NFTs, entered into a $4 million agreement to end a class-action lawsuit, which alleged that the NFTs were sold as unregistered securities.

The firm’s CEO, Roham Gharegozlou, claimed that the case found that NFTs on a decentralized public network are not securities “in the same way trading cards are not securities.”

The settlement agreement showed that Dapper Labs agreed to pay $4 million if the plaintiffs stopped claiming that the NFTs were securities. It also included ensuring that the Flow blockchain would be sufficiently decentralized and out of the company’s control.

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Thanks for reading this digest of the week’s most notable developments in the NFT space. Come again next Wednesday for more reports and insights into this actively evolving space.