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The SEC is pursuing NFTs and has issued subpoenas to various creators and firms

The SEC is now pursuing the designers of NFTs to see if they are in violation of the agency’s laws and regulations.

According to Bloomberg, the financial authority is concerned that NFTs are being utilized for uncontrolled securities token sales. The current investigation is also looking into fractional non-fungible tokens, which are tokens that have been divided into tiny pieces so that the artwork or unique item can be possessed by multiple people.

According to the article, the SEC has issued subpoenas to NFT inventors as well as numerous crypto businesses and exchanges, demanding additional information.

SEC Commissioner Hester Peirce, often known as “Crypto Mom,” warned late last year that the commission would next focus on non-fungibles.

“Given the breadth of the NFT environment,” she remarks at the time,

“some portions of it might fall within our authority,”

So, she adds,

before adding, “people need to be thinking about potential places where NFTs might run into the securities regulatory regime.”

The SEC’s main worry, as with crypto assets, is whether NFTs can be classed and regulated as securities. A fungible, negotiable financial instrument with monetary value is referred to as a such asset. To evaluate whether something is a security, the SEC uses the Howey Test, which is based on a 1946 Supreme Court decision.



Industry advocates, on the other hand, say that regulations that pertain to equity markets should not apply to cryptocurrencies or NFTs.

Last year, over $44 billion in crypto assets were delivered to NFT-based smart contracts on the Ethereum blockchain, according to blockchain analytics firm Chainalysis. This was up from $106 million in 2020 by more than 40,000 percent.

However, the number of unique buyers has decreased to a three-month low, indicating that NFT markets are cooling.

According to CryptoSlam, this number has dropped to 50,827 as of February 28. This is a 47 percent drop from the peak of 95,592 in January.

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Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.