Stuart Alderoty, the Chief Legal Officer of Ripple, recently suggested that the US Securities and Exchange Commission (SEC) could face significant legal issues if it continues its lawsuit against OpenSea while attempting to designate certain NFTs as securities.
Alderoty's Arguments
Alderoty’s argument draws on a 1976 SEC ruling concerning art galleries. In that decision, the SEC concluded that galleries selling art, even with investment purposes, did not need to register as securities dealers. According to Alderoty, this precedent should be relevant to OpenSea’s situation.
SEC Precedents
He highlighted a ruling involving Art Appraisers of America, which was exempt from SEC registration despite selling lithographs with investment potential. The SEC ruled that art sales, when not accompanied by guarantees or market manipulation, fall outside the scope of securities law.
Community Reaction to SEC Actions
Alderoty believes that NFTs, like traditional art, should not be considered securities. He claims that OpenSea’s principle, which emphasizes digital art rather than financial investment, is consistent with this historical trend. The actions taken by the SEC have not been well received by many parties. The CEO of OpenSea, Devin Finzer, has condemned the targeted attack on artists and creators using OpenSea. US Congressman Wiley Nickel criticized this approach as invasive and problematic, eroding public confidence in regulations. Additionally, billionaire Mark Cuban has publicly criticized SEC Chair Gary Gensler for poor regulatory handling. Alderoty's recent comments, alongside this broader complaint, reflect the emerging concerns and frustrations regarding the SEC's regulatory approach to cryptocurrencies.
The debate surrounding the SEC’s regulatory approach towards NFT remains vibrant and has significant implications for the digital asset market. The case of Stuart Alderoty, an Attorney, suggests that legal issues might restrict the SEC’s pursuit of the industry, recommending that the rules governing the growing NFT market be straightforward and fair.
Comments