A well-known non-fungible token marketplace has appealed to the US Securities and Exchange Commission to exempt NFT marketplaces from oversight under federal securities regulations.
In a letter addressed to a key commissioner leading the agency’s Crypto Task Force, the marketplace’s general counsel and deputy general counsel emphasized the need for the SEC to “clearly state that NFT marketplaces do not fit the definition of exchanges as outlined in federal securities laws.”
They reasoned that NFT marketplaces do not fulfill the legal criteria for exchanges, as they neither execute transactions, operate as intermediaries, nor gather multiple sellers for identical assets.
“The previous enforcement efforts of the Commission have led to confusion. We strongly encourage the Commission to eliminate this ambiguity and safeguard the capacity of US technology firms to take the lead in this domain,” they stated.
The legal representatives suggested that the Crypto Task Force should specifically clarify how exchange regulations apply to marketplaces dealing in non-fungible assets, akin to recent staff remarks on memecoins and stablecoins.
According to a notice released on April 4, the SEC indicated that stablecoins fulfilling certain conditions are deemed “non-securities,” thus exempt from transaction reporting obligations.
Additionally, the SEC’s division of corporate finance mentioned in a staff statement from February 27 that memecoins should not be classified as securities under federal laws but rather considered more like collectibles.
The legal team contended that NFT marketplaces should also be excluded from the requirement to register as brokers, asserting that they do not provide investment advice, execute transactions, or hold customer assets.
“We request that the SEC alleviate the prevailing industry confusion on this matter by issuing informal guidance. Furthermore, we invite the Commission to exempt NFT marketplaces from proposed broker regulations in the future,” they noted.
During the previous administration, the SEC has gradually tempered its stringent approach toward crypto that was established under the former chair. The agency has retracted several enforcement actions it had previously instigated against crypto entities and has ceased investigations into some companies regarding potential securities law breaches, which included one involving the NFT marketplace in question.