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This document was last updated on 11th August, 2023
The simple answer is yes - there are no restrictions as the underlying asset is considered a property. However, Metacask will verify your details and conduct Anti-Money Laundering checks on you to ensure that you are indeed allowed to buy and trade these NFTs. This differentiates Metacask from all other NFT platforms, but the requirement is necessary as prospective purchasers are owning a tokenized physical asset which is held in bond.
The NFT represents your ownership of the physical asset. This will replace the certificate of ownership, which are generally issued by brokers, and is at times is used instead of the paper-based Delivery Order required to signify ownership to the storage facility (distillery or warehouse). The proof of ownership certificate is only as reliable as the brokers systems and ability have this available beyond insolvency. A NFT on blockchain provides a verifiable and transparent proof of ownership.
The current ecosystem, for the most part, recognises ownership at the storage facility level via a Delivery Order. However, for most facilities, this is a time consuming process and most brokers hold the casks in their name at the facility and issue a certificate of ownership. Brokers track this ownership via private databases. Metacask and VCL Vintners are taking the first step to record this on the blockchain as an irrefutable record of ownership of the cask. The eventual goal of Metacask is to remove the need for the delivery order and rely on the blockchain for inventory and ownership management.
Yes it can be arranged, each NFT has an onward sale commission which is designed to support additional services such as obtaining the Delivery Order, insurance and storage.
Given the NFT represents your asset, and the ownership is recorded on the public blockchain, in the unlikely event of an issuer insolvency, the liquidators can refer to the blockchain as a source of truth over the ownership of the asset. In this event, the NFT can be burnt and a delivery order executed to move the ownership at the facility level to your name. Once the NFT mechanism is widely adopted, there will no longer be a need for this, as the blockchain provides the record independent of the issuer.
Scotch casks have to be kept in Scotland under bond by law in HMRC regulated facilities. Here, the cask will be kept in the best conditions for the whisky maturation process. The cask will be monitored and can be re-gauged at any time for a fee. Other assets will follow a similar principle depending on where they are produced. Often an issuer will state the initial period that is covered as part of the pricing, after this period expires, the storage and insurance costs are your liability.
In the early phase of this project, it is most likely the cask will be held under the brokers name at the facility and your ownership is via the NFT. As a result, the storage facility may not have a direct record of your ownership. Once the blockchain inventory management system is adopted widely, storage facilities will be able to verify your ownership and therefore allow you to visit the cask.
As the NFT represents a cask in the issuer's name, the broker will arrange for insurance for the cask until you request a delivery order and the NFT is burned. At this point you can move the cask to a storage facility of your choice and arrange insurance as you see fit. There are numerous specialist providers, and the issuer or Metacask maybe able to assist with finding a trusted provider.
At the starter end, the assets can be anywhere from $150 to $5000, special NFTs will be dropped for assets that are of much higher value periodically, so watch out for these.
The asset value is determined by the year of production, type of the asset (cask/bottle), distillery, age, OLA (Original Litres of Alcohol - if cask), RLA (Remaining Litres of Alcohol - if cask) and ABV (Alcohol by Volume). Additionally, extra special NFTs dropped on Metacask may have extra content which may supplement the value of the NFT.
As the liquid matures, typically there is also a price appreciation. Not all casks will mature and appreciate the same way, and any past pricing is not really an indicator for any future performance. As the marketplace evolves and pricing becomes more transparent, it may be possible to shorten the holding periods as casks can be traded in a more liquid market. Or you can hold it as long as you wish, and even eventually have it bottled!
On Metacask, you will be able to sell your NFTs without any restrictions, the price will be determined for auctions by the platform and it is up to you whether you accept the price to sell at. You can also request a delivery order and burn the NFT, and arrange a sale through another traditional broker, though we hope you will be able to find liquidity on Metacask.
You can for example list the NFT for sale on Metacask, or redeem the NFT and take physical ownership and sell via a traditional broker. Finally, you can always request it be bottled and take delivery of the bottles - this is of course the tastiest option!
The simple answer is no. These are real world assets with capital appreciation tied to the characteristics of the physical asset. There may be assets that appreciate more than others, but this happens over the lifetime of the asset (measured in years rather than days).
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