The advocacy group Digital Chamber urges the U.S. Congress to pass laws that would classify certain NFTs (non-fungible tokens) as consumer products, shielding them from federal securities regulations. This comes in response to potential SEC legal action targeting OpenSea.
In a statement on Sept. 10, Digital Chamber criticized the SEC notice against OpenSea, calling it an overstep into the digital assets space. Although the regulator hadn’t yet filed a lawsuit against the NFT platform when this was published, a Wells notice indicated that the SEC was contemplating legal action.
The Digital Chamber urged lawmakers to clarify US law and specify that NFTs should not count as “financial products” or fall under the SEC’s jurisdiction as securities. According to the group, the commission, led by Gary Gensler, has mainly regulated NFTs through enforcement. Specifically, this approach and Congress’s unclear stance put the industry in a difficult position.
SEC faces NFT backlash
The Digital Chamber argued that many NFT applications don’t aim to be investment contracts or financial tools for speculation. They believe that while people sometimes sell NFTs for a profit, similar to traditional collectibles or artwork, they should treat these items as consumer goods rather than securities.
Additionally, CEO Devin Finzer described the OpenSea Wells notice received on Aug. 28 as “a move into uncharted territory.” This isn’t the first time companies in the NFT space have faced legal challenges; investors and artists have taken legal action against Dapper Labs over its NBA NFTs and DraftKings for claims that their NFTs were unregistered securities.
In 2023, the SEC accused the entertainment company Impact Theory of selling unregistered securities through its Founder’s Keys NFTs. Depending on the results of the upcoming US election, the SEC’s leadership and regulatory stance might shift starting in Jan. 2025.
Donald Trump has promised to fire Gensler immediately if re-elected. Meanwhile, some industry leaders believe that Kamala Harris might adopt a different regulatory stance than the current Biden administration.
Related | Bitcoin mining reaches new heights, but investor interest wanes
