The crypto and blockchain advocacy organization Digital Chamber is calling on the United States Congress to enact legislation “to clearly define certain NFTs [non-fungible tokens] as consumer products and exempt them from federal securities laws” in response to potential enforcement actions against the OpenSea platform.
In a Sept. 10 notice, Digital Chamber described the US Securities and Exchange Commission (SEC) Wells notice against OpenSea as an “overreach into the digital asset industry.” Though the regulator had not filed a lawsuit against the NFT platform at the time of publication, a Wells notice suggested that the SEC was considering an enforcement action.
Source: Digital Chamber
Digital Chamber asked policymakers to define in US law that NFTs were not “financial products” nor classified as securities under the SEC’s authority. According to the group, the commission and its Chair, Gary Gensler, were taking a regulation-by-enforcement approach to NFTs, which, coupled with a lack of clarity from Congress, “put[s] the industry at risk.”
“Many NFT applications are clearly not designed as investment contracts or financial tools for speculation, even if consumers occasionally sell NFTs for a profit, much like traditional collectibles or artwork,” said Digital Chamber. “These items should be classified as consumer goods, not securities.”
Related: Immutable to shut down NFT marketplace
According to CEO Devin Finzer, the OpenSea Wells notice received on Aug. 28 was “a move into uncharted territory.“ However, investors and artists have previously brought enforcement cases against Dapper Labs over its NBA NFTs and DraftKings over allegations that their NFTs were unregistered securities.
In 2023, the SEC charged entertainment firm Impact Theory with conducting unregistered securities sales through its Founder’s Keys NFTs. The commission later ordered the company to pay more than $6 million.
Depending on the outcome of the US election, the leadership and regulatory approach taken by the SEC…
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