Derk lottman

Republic Launches Security NFTs, Giving Music Fans Artist Royalty Stock

In partnership with Opulous, financial services company Republic creates Republic Music to create, produce and share music royalties through NFTs.

Republic, the financial services company, offers music fans and artists the privilege of benefiting from the creation, production, streaming and licensing of music, through its blockchain platform Opulous. For $ 100, listeners can invest in what Republic calls security NFTs, which differ from other NFT offerings in that Republic presents these NFTs as a type of security, i.e. it passes the Howey’s test, being something you can invest in, with the possibility of further returns.

Artists will be able to raise production funds directly from fans, and fans with a stake in music should encourage streaming and engagement. According to Pialy Aditya, chief strategy officer at Republic, all investors will become part of an LLC by investing in the new platform. Aditya sees this investment as an opportunity to turn fans into owners. Initially, investors have the option of being a part of rapper Lil Pump’s new single titled “Mona Lisa”, and new single from KSHMR, the new EDM artist. Further artist integrations are expected to be announced during October 2021.

How are S-NFTs different from NFTs

This Republic company sees the pioneer of a new framework that combines blockchain technology and S-NFTs. S-NFTs will be subject to SEC regulation, and investors will be required to comply with relevant know-your-customer and anti-money laundering regulations.

NFTs are subject to SEC oversight through a process called “splitting,” which is a fairly new concept in the world of NFTs. This means that multiple investors can buy parts of it, instead of one person owning the whole thing, somehow changing the status of the item as a work of art, much like unregulated NFT, in one title. The notion of splitting has been around in the non-NFT world for some time. One example is a company called Masterworks, which splits up physical works of art for investors. This company registers its offers with the SEC.

What Republic’s decision means for NFT markets

Security NFTs can cause problems in markets like OpenSea, as a special license is required to sell securities, and there are tax reporting implications. OpenSea itself could be registered as a securities issuer to work around this problem. A marketplace, called Fractional.art, is already a major player in the space for fractional digital works of art.

By transforming NFTs into securities, a multitude of new opportunities are created for artists. Artists could potentially offer more than royalties; they can offer more conventional “unsafe” tickets, merchandise and other NFTs to their fans.

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