On Tuesday, the Digital Chamber encouraged legislators to enact legislation designating specific non-fungible tokens (NFTs) as consumer products. Thus, they would be exempt from federal securities laws.
The trade association requested legislation clarifying that NFTs designated for consumer use are distinct from financial products. Furthermore, it declared that these should be exempt from SEC supervision.
This would guarantee they are not classified as securities or other financial instruments.
It responds to the Securities and Exchange Commission’s (SEC) heightened scrutiny of the NFT market.
NFTs Are Not Securities, Digital Chamber Argues in Push for Legislative Clarity
The association represents a wide range of stakeholders in the digital economy. It contended that many NFT applications are intended to serve as something other than speculative financial instruments or investment vehicles.
Even though some NFTs are resold for profit, the association maintains that this does not render them financial products.
“These items should be classified as consumer goods, not securities.” “TDC is advocating for legislative clarity that reflects this distinction,” it stated.
Moreover, the association also criticized the enforcement-driven regulatory strategy of SEC Chair Gary Gensler. It contended that this method endangers the livelihoods of numerous individuals who depend on NFTs.
The association observed that individuals employ NFTs for purposes beyond their passion initiatives. Additionally, they establish connections with communities and generate income by trading or selling digital assets in this marketplace.
The NFT Market Faces Legal Uncertainty as the SEC and courts scrutinize Platforms such as DraftKings and OpenSea
The SEC issued a Wells Notice to OpenSea last month, asserting that certain NFTs on the platform may be classified as securities under US law, and in the past, the SEC was focused on cryptocurrency exchanges like Coinbase and Uniswap and other entities like Kraken and Robinhood.
However, the SEC is now attempting to navigate uncharted regulatory waters by focusing on NFTs.
In the interim, DraftKings discontinued its NFT operations in response to a class action lawsuit that claimed their NFTs were unregistered securities.
The federal judge’s decision to allow the case to proceed suggested a strong case that DraftKings’ NFTs might in fact qualify as securities.
Similarly, Dapper Labs, renowned for its NBA Top Shot product, was the subject of a lawsuit that made comparable allegations, underscoring the ongoing legal obstacles in the NFT industry.