No it is not illegal to use coins to make a sculpture.

Look at Johnny Swing's sculptures www.johnnyswing.com - he makes a couch using roughly 7000 nickels, 35,000 welds.
Don't know what it sells for but I can't afford it.


Here is info.

(Text as of 2/19/02) 18 U.S.C. 331:

Whoever fraudulently alters, defaces, mutilates, impairs, diminishes, falsifies, scales or lightens any of the coins coined at the mints of the United States, or any foreign coins which are by law made current or are in actual use or circulation as money within the United States; or whoever fraudulently possesses, passes, utters, publishes, or sells, or attempts to pass, utter, publish, or sell, or brings into the United States, any such coin, knowing the same to be altered, defaced, mutilated, impaired, diminished, falsified, scaled or lightened - shall be fined under this title or imprisoned not more than five years, or both. (Emphasis added.)

(b) The prohibition contained in 82.1 against the treatment of 5-cent coins and one-cent coins shall not apply to the treatment of these coins for educational, amusement, novelty, jewelry, and similar purposes as long as the volumes treated and the nature of the treatment makes it clear that such treatment is not intended as a means by which to profit solely from the value of the metal content of the coins.