The crackdown by the US SEC on Non-Fungible Tokens has drawn criticism from 2 commissioners who claim these are not securities
The recent crackdown by the United States Securities and Exchange Commission (SEC) on non-fungible tokens (NFT) is causing a lot of commotion. Two commissioners from the agency recently shared their thoughts on the matter following the OpenSea Wells Notice and after another firm got into trouble for selling NFTs, which were tagged as “crypto asset securities.”
Buyer’s Intent Does not Transform NFTs to Securities
In a joint statement related to Flyfish Club’s enforcement action, commissioners Hester Peirce and Mark Uyeda clarified, “The intent of a buyer cannot transform a non-security into a security.”
For perspective, the duo painted a scenario of a well-known artist who sells a limited set of numbered prints.
They believe the artist could sell her art to a couple who wants to display it in their home. Her customer could also be someone who wants to turn around and sell it for a profit and is making a bet on the artist’s future. In the commissioners’ opinion, whatever the buyer makes of the art does not change the item’s status.
Therefore, Peirce and Uyeda do not think securities laws should play any part in the Flyfish Club’s case, which could also apply to OpenSea.
SEC’s NFT Enforcement Action Impact on Creators’ Income
This duo believes that digital collectibles allow creatives like chefs, musicians, and artists to express their creativity and make money simultaneously. They describe it as a potentially efficient way to sell access to experiences and communities.
However, the SEC’s recent NFT enforcement trend feels like a threat to these creators. OpenSea’s Wells Notice from three weeks ago really surprised the broader crypto community. Despite the shock, the NFT marketplace CEO Devin Finzer clarified that OpenSea is ready to stand up and fight.
The Wells Notice is still a preliminary warning to inform OpenSea of the charges the regulator is considering bringing against them. In the long run, they eventually translate to enforcement actions. Crypto brokerage firm Robinhood received one from the SEC a few months ago. The regulator accused the company of violating securities laws as it concerns some of its listings.
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