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Austrian insurance law and the expanding NFT market

12 November 2021

The NFT market is becoming increasingly influential on the world stage with Christie's selling an NFT linked to an artwork for over Euros 60 million (USD 69 million) in March 2021, the third-most expensive art piece ever sold from a living artist.

An NFT is a digital asset that represents real-world objects like art, music, in-game items and videos. They are bought and sold online, frequently with cryptocurrency, and are encoded with the same underlying software as many cryptos.

NFTs have been around since 2014 and are becoming an increasingly fashionable way to buy and sell digital artwork with NFTs stored in a blockchain. While anyone can explore the blockchain record to view the underlying asset only the holder of the NFT has the "private key" that verifies ownership.

The holder of the NFT is recorded as the owner of the underlying asset unless the NFT is transferred to another person's digital wallet. Once an NFT transaction is made and assigned to a different private key it is irreversible.

With the NFT market expanding it raises the question of their insurance position which is currently being debated in Austria. The pivotal factor of conflict-of-laws regulations – the "insured risk" – is difficult to define for NFTs, as they do not have a traditional "location".

An insurance contract on NFTs between an Austrian insurer and an Austrian policyholder can be argued is a purely domestic matter and, therefore, Austrian insurance law is applicable.

Under the assumption of a conflict-of-laws, Austrian insurance law would still be applicable if the insurer and the policyholder have their registered office/habitual residence in Austria.

Austrian statutory law does not define "insurance" and based on case law, an insurance contract requires: a risk; a transfer of that risk to an insurance undertaking and a remuneration such as a premium.

NFTs are insurable according to Austrian Insurance Law, however, there are questions surrounding their valuation, which is why, currently, there is no insurance offer for NFTs although this could change in response to the increasing market.

If you wish to discuss any insurance questions or have any queries, please visit or contact Vida Jarašiūnaitė

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