Coinbase has established the Creator Legal Defense Fund in response to increasing regulatory scrutiny by the SEC.
Creation and Purpose of the Fund
Coinbase, in collaboration with venture capital firm a16z and NFT marketplace OpenSea, has created the Creator Legal Defense Fund to support NFT initiatives. The $6 million fund was established in response to increased regulatory scrutiny, including a Wells notice issued to OpenSea by the US Securities and Exchange Commission (SEC). The primary goal of the fund is to defend the crypto community and urge creators to resist 'misguided actions from the SEC.'
Support and Criticism
Leading law firms such as Fenwick & West LLP, Goodwin Procter LLP, and Latham & Watkins LLP offer crucial legal support to those working in the blockchain and NFT fields. Meanwhile, the cryptocurrency community and US lawmakers continue to criticize the SEC's 'regulation by enforcement' strategy. In 2022, the agency filed its first case against an NFT issuer, charging a Los Angeles-based media corporation with marketing unregistered securities using NFTs, resulting in a $6 million settlement. The regulator has also accused large crypto platforms, such as Coinbase, Binance, and Kraken, of breaking securities regulations.
Context and Current State
Coinbase has established itself as a key champion for the crypto business, founding the Stand With Crypto project in 2023 and donating millions to Fairshake, a political action committee that supports the crypto industry. These events are taking place during a significant decline in the NFT business, with 96% of projects considered dead. Unfair regulatory pressure could exacerbate these issues, potentially escalating the trend.
The creation of the Creator Legal Defense Fund marks a significant step in supporting the crypto community and the NFT industry amid growing regulatory pressure.
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