The United States Securities and Exchange Commission (SEC) has issued a Wells notice to OpenSea, the leading non-fungible token (NFT) marketplace. This notice suggests that the NFTs traded on OpenSea might be considered unregistered securities. Devin Finzer, CEO of OpenSea, shared this news on August 28th in a post on X (formerly Twitter). The notice indicates that the SEC may take enforcement action against the company.
Finzer has painted this move by the SEC as an action that takes the agency into “uncharted territory”, pointing out that the EFF level could arrest the innovation progress across the board for NFTs. He stressed the fact that potential victims include hundreds of thousands of artists and creators who have profiles on the internet and who do not have legal means to protect themselves since they cannot afford it due to financial issues.
OpenSea Offers $5M for NFT Creators’ Legal Defense Amid SEC Scrutiny
Finzer believes that the regulation of NFTs as securities can potentially dissuade people from creating digital art in the future since it has evolved into a means of earning a livelihood and a sense of belonging for many.
For those who might be impacted, OpenSea has offered to contribute $5 million toward legal defense for NFT creators and developers who receive such letters. Finzer stressed the concept of unfettered freedom for each creator, no matter how small they are, to experiment without the threat of bringing them to court.
This development is in line with other happenings across the cryptocurrency space where companies such as Coinbase, Uniswap Labs Robinhood, Kraken, and ConsenSys, among others, have been putting the SEC on the spot. Another area that has emerged as a target of these regulation wars is NFTs, which could signify even more substantial ramifications for the buying and selling of art and other valuable collectibles in the digital space.
Other artists such as Mann (Songadaymann) and Brian L. Frye have also expressed concern because if their works are deemed to be unregistered securities, it will substantially discourage creativity and innovation. However, Finzer expects the SEC to change for the better and be more open to the development of the NFT market.
