NFTs have gained massive traction and widespread use, with $25 billion worth being bought in 2021.
F-NFT represents ownership of part of an NTF which can be divided into millions of separate fungible tokens.
In 2021 the Doge NFT was bought for 1,696 Ether (~$4 million at the time) by PleasrDAO and fractionalized into tokens called DOG.
F-NFTs allow smaller investors to own part of a whole NFT, which is especially advantageous for expensive NFTs.
Masterworks bought Andy Warhol’s “1 Colored Marilyn” and then sold the ownership to more than 1,300 investors 6 months later.
UkraineDAO held an auction of a Ukrainian flag NTF that was fractionalized afterwords with ~2.3 million fractions owned by 3200 people raising $445 000 for conflict relief in Ukraine.
The SEC's Hester Price has warned that F-NFTs could be seen as securities and anyone selling them should be careful.
If F-NFTs are considered securities, sellers would be required to register with the SEC and offer personal information about the seller and asset.
Masterworks first buys a painting and files it with the SEC as an IPO, much like a company does; “shares” in then painting are made available for purchase on its website.