The Digital Chamber has appealed to the US Congress to enact legislation that clearly defines NFTs as consumer products, exempting them from federal securities laws.
Digital Chamber's Appeal
On September 10, the Digital Chamber issued a notice describing the US Securities and Exchange Commission (SEC) actions against the OpenSea platform as an 'overreach into the digital asset industry.' Despite no lawsuit being filed against OpenSea at the time of publication, a Wells notice hinted at potential enforcement actions by the SEC.
SEC Remarks and Controversy
The Digital Chamber is urging lawmakers to clearly define in US law that NFTs are not 'financial products' and do not fall under the SEC's regulatory authority. According to the group and its Chair Gary Gensler, the current regulation-by-enforcement approach taken by the SEC creates uncertainty and risks for the cryptocurrency industry. 'Many NFT applications are clearly not designed as investment contracts or financial tools for speculation, even if consumers occasionally sell NFTs for a profit, similar to traditional collectibles or artwork,' said Digital Chamber. 'These items should be classified as consumer goods, not securities.'
Regulatory Future Impact
OpenSea CEO Devin Finzer described the Wells notice received on August 28 as 'a move into uncharted territory.' However, there have previously been instances of investors and artists filing lawsuits against Dapper Labs and DraftKings, claiming that their NFTs were unregistered securities. In 2023, the SEC charged Impact Theory with selling unregistered securities through its Founder’s Keys NFTs and ordered the company to pay a fine of over $6 million. Depending on the outcome of the US election, the leadership and regulatory approach of the SEC could change starting in January 2025. Republican candidate Donald Trump has vowed to fire Gensler on the first day of his re-election, while some industry leaders suggest that Democratic nominee Kamala Harris might take a different regulatory approach.
In the midst of regulatory uncertainty surrounding NFTs, the Digital Chamber's appeal to the US Congress is gaining prominence. The upcoming US elections could bring changes in the approach to digital asset regulation.
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