OpenSea Receives Wells Notice from the U.S. SEC Over NFT Operations
NFT marketplace OpenSea has come under the regulatory scrutiny of the United States Securities and Exchange Commission (SEC). OpenSea co-founder Devin Finzer revealed that the securities agency issued the NFT platform a Wells notice, a step towards a regulatory crackdown.
The U.S. SEC claims that NFTs are securities and must be registered with the agency before being offered to investors. Over the past years, the securities regulator has argued that crypto assets are security tokens. This has caused months-long legal skirmishes between the SEC and crypto-focused firms, such as Coinbase, Binance, Robinhood, and Kraken.
Finzer stressed that NFTs do not fall under the scope of the SEC’s oversight.
“NFTs are fundamentally creative goods: art, collectibles, video game items, domain names, event tickets, and more. We should not regulate digital art in the same way we regulate collateralized debt obligations,” he wrote.
The OpenSea co-founder also noted that the SEC’s latest move will affect “hundreds of thousands” of artists and creators. These include students who harness the NFT platform to sell their digital artworks, game developers integrating NFTs into gameplay, and avid collectors scouting for new digital art and communities.
Finzer noted that most of these creators are not financially capable of covering any legal fees that may accompany the SEC’s potential lawsuit. The NFT proponent and his team pledged $5 million to cover legal expenses for creators and developers who receive the Wells notice. This initiative solidifies the NFT marketplace’s commitment to helping creators and developers embrace the NFT market.
The OpenSea co-founder hopes that “the SEC will come to its senses sooner rather than later and that they’ll listen with an open mind.”
If the SEC follows through with its plan to sue OpenSea over claims of unregistered securities sales, the global NFT market may be severely impacted. Creators and game developers will likely be discouraged from offering digital art to collectors due to the regulatory hurdles attached.
