Crypto trading platform eToro launches $20 million NFT fund as industry approaches inflection point

Trading platform eToro unveiled a $20 million fund to purchase NFTs and bolster creators. The firm announced the launch at the Bass Contemporary Art Museum in Miami Thursday.

The trading platform’s fund is part of a new initiative called eToro.art, which aims to support NFT creators and brands.

Guy Hirsch, eToro’s U.S. managing director, said the new fund marked the beginning of a greater NFT strategy for the company, which will eventually offer a multitude of services to allow investors to participate in the emerging economy.

NFTs, or nonfungible tokens, are digital assets that represent real-world objects — such as art, music, real estate and beyond — and can’t be replicated.

“Before, with bitcoin and ether, you had only the likes of Goldman Sachs or similar traditional financial players participating or looking at expanding into crypto,” Hirsch told CNBC. “NFTs are essentially making any and every potential brand a participant in this market.”

As part of its new initiative, eToro showcased its digital art collection, which includes well-known projects, including the Bored Ape Yacht Club, CryptoPunks and World of Women. Further, eToro plans to commit $10 million to support emerging creators and brands in bringing their new NFT projects to market this year.

Digital art is just one use case for NFTs. Hirsch said eToro plans to add capabilities that will give customers exposure to use cases beyond digital art.

In the past few months alone big brands from every industry, including Coca-Cola, McDonald’s, Nike, Gucci, the National Football League and more, have brought NFTs into their marketing initiatives.

“Any brand can home in on this and create some sort of an NFT that represents an ownership stake in part of the brand,” Hirsch added.

Valuing digital art

Investors have struggled to see value in digital art and are perplexed by big sales, such as Beeple’s piece, which sold at Christie’s for $69 million.

Price discovery in digital art and knowing what to buy are still big question marks, but the industry is working on it, Hirsch said. Today, investors typically use the floor price, or the minimum amount of money you can spend to buy an item from a collection.

“It needs to be more sophisticated than that,” Hirsch said. “We see new services emerging that will be akin to the appraisal process of traditional art. Within a year or two we’ll have third-party services that will appraise individual pieces and give you an approximate price on what you’re about to buy or what you own in a way that would be agreed on by market participants.”

Art has been a strong asset class for decades, but only for the super rich, Hirsch noted. EToro is looking to bring both new artists and new investors together to help both build their wealth in this new way.

NFTs from some of the “blue-chip” projects in eToro’s collection already go for a minimum of hundreds of thousands of dollars on OpenSea, the largest marketplace for NFTs. That’s hardly accessible to smaller investors, but the company expects that many of the lesser-known digital artists whose work it’ll help bring to market won’t be priced like a Bored Ape — a popular collection that’s lured celebrity buyers.

“When these artists create a collection or NFT drop, the price on those would be quite low,” Hirsch said. “People would be able to participate, and if the community is strong and if the art is promising, it will appreciate in value, but the entry point would still be accessible to the everyday investor.”

“Some of them will, hopefully, reach the point of Bored Ape status,” he added. “Eventually, like the Bored Apes, that will create a lot of new millionaires, a lot of new wealth for people who didn’t have it before.”