The SEC has been targeting NFTs for some time, with Hester Peirce stating back in March 2021 that selling fractional NFTs could be against the law.
The US Securities and Exchange Commission (SEC) has reportedly kept its eyes on the NFT market and NFT creators as it launched an investigation into trades on several NFT marketplaces that may be in breach of regulations. According to sources familiar with the topic, the SEC is investigating whether certain NFT items constitute securities and should be regulated as such.
In a report published by Bloomberg, attorneys for the SEC’s enforcement unit have served multiple subpoenas on NFT preparers alongside multiple crypto exchanges in recent months, requesting information on partial NFTs that allow multiple people to hold and trade a stock asset . Fractional NFTs use a token that can be broken down into many units that are sold separately.
SEC chief Gary Gensler previously stated that he believes many crypto tokens are likely securities that should fall under SEC jurisdiction. Hester Pierce, the commissioner, told reporters that the SEC may soon shift its focus to NFTs.
“Given the breadth of the NFT landscape, certain parts of it could fall within our purview. People need to think about potential places where NFTs could get into the securities regulatory system,” Peirce specified. Peirce is widely known in the crypto scene for her pro-crypto views and opinions, earning her the nickname “Crypto Mom”.
The recent SEC investigation is reportedly the start of strong interest in how fractional NFTs are being used. The SEC has been targeting NFTs for some time, with Hester Peirce stating back in March 2021 that selling fractional NFTs could be against the law.
“You’d better be careful that you don’t create something that’s an investment product, which is a security,” she said.
Pierce added that NFTs raise “the same questions that ICOs have raised,” before warning investors that fractional NFTs could be considered unregistered securities.
The SEC’s grip on the cryptocurrency market appears to be tightening as it recently ordered BlockFI, a New Jersey-based crypto lending company, to pay a record $100 million fine for failing to classify “high-yield” lending products as list securities.
This latest probe now joins the list of sectors the SEC has touched. The federal agency pursued initial coin offerings, or ICOs, a popular method for cryptocurrency startups to launch their projects in 2017 and 2018.
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https://www.coinspeaker.com/sec-nft-market-creators-securities/ SEC Targets NFT Market and NFT Makers Over Alleged Securities Violations