Apparently, the Securities and Exchange Commission thinks the NFT market is a securities market. On Tuesday, August 27, NFT marketplace OpenSea received a Wells notice from the SEC. A Wells notice is a formal notification that the SEC staff intends to file a civil enforcement action against the recipient. While a Wells notice is a confidential communication, the SEC seems to think that some or all of the NFTs on OpenSea are unregistered securities and selling them violates the securities laws.Brian Frye is a law professor at the University of Kentucky and conceptual artist who works with NFTs.
The SEC is wrong. No, it’s worse. The SEC is nuts. The NFT market is identical to the art market. Or rather, the NFT market is an art market. If the SEC can regulate the NFT market, then it can also regulate the art market. But the art market existed long before the SEC was created in 1934, and the SEC has never regulated the art market or even contemplated regulating the art market. It can’t and it shouldn’t. If Congress had wanted to give the SEC authority to regulate the art market, it would have said so. And, if it made sense for the SEC to regulate the art market, it would have done so a long time ago.
While this Wells notice is ridiculous, it’s also no surprise, at least to me. I predicted it five years ago, when I published a law review article styled as a work of conceptual art titled “SEC No-Action Letter Request” in 2019. The conceptual artwork consisted of filing a no-action letter request with the SEC, proposing to sell an editioned conceptual artwork titled “SEC No-Action Letter Request” and observing that it looked an awful lot like an unregistered security, according to the SEC’s definition. But the SEC ignored me, because it considered my observation “fanciful.”And others like Bloomberg’s Matt Levine, agreed with them, claiming that my artwork wasn’t a security because no one would actually buy it. Okay, I guess. But, when I was a securities lawyer at Sullivan & Cromwell, I sure as hell wouldn’t have advised a client that they could avoid SEC regulation by offering to sell a security that no one would actually buy.
Along came the NFT market, and it turned out that people would buy my artwork after all. I refashioned “SEC No-Action Letter Request” as an NFT, and it sold out in less than an hour. I was delighted, not only by the money, but also by the proof of concept. I guess people would buy it after all. But the SEC still didn’t care and kept ignoring my no-action letter requests.Read more: OpenSea Gets 'Wells Notice' From SEC, Which Calls NFTs Sold on Platform 'Securities'
What gives? At first, I thought the SEC didn’t care about NFTs. But I was wrong. They didn’t want to sue me, they wanted to sue someone with an incentive to settle. That’s why they sued Impact Theory and Stoner Cats. Both were conventional NFT projects that had run their course. The defendants had no reason to fight, because they had nothing to gain.That’s why we sued the SEC. I don’t care about money. I care about the principle. I create and write about NFTs because I find them interesting. And part of what I find interesting about NFTs is that they expose the incoherence of the SEC’s understanding of what it’s authorized to regulate.
Anyway, Jonathan Mann and I filed a declaratory judgment action against the SEC in federal court, asking it to explain how and why it’s authorized to regulate the sale of NFTs. After all, we’re just artists selling our artworks to people who like them. It shouldn’t matter that we’re selling our artworks on the blockchain, rather than a conventional catalogue raisonne.And that’s the point. When artists sell artworks in the conventional art market, what they’re selling is objects that represent ownership of an entry on the artist’s catalog. From an economic perspective, a conventional artwork is just a dirty piece of cloth or lumpy rock that represents ownership of a fractional interest in an artist’s commercial goodwill. An NFT is the same thing, in digital form.
When the SEC regulates the NFT market, it’s really regulating the art market. Can it make a superficially coherent argument that NFTs are securities it can regulate? Sure. But I don’t think the courts are going to buy it.Regardless, if the SEC wants to go after OpenSea, it can’t avoid our lawsuit. And I don’t think it has any answers to our questions that aren’t embarrassing.Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.Edited by Benjamin Schiller.
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marcushenderson624
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09.10.25 11:05
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12.10.25 01:12
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12.10.25 21:36
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robertalfred175
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14.10.25 08:46
robertalfred175
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14.10.25 08:46
robertalfred175
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15.10.25 18:07
crypto
Cryptocurrency's digital realm presents many opportunities, but it also conceals complex frauds. It is quite painful to lose your cryptocurrency to scam. You can feel harassed and lost as a result. If you have been the victim of a cryptocurrency scam, this guide explains what to do ASAP. Following these procedures will help you avoid further issues or get your money back. Communication with Marie ([email protected] and WhatsApp: +1 7127594675) can make all the difference.
15.10.25 21:52
harristhomas7376
"In the crypto world, this is great news I want to share. Last year, I fell victim to a scam disguised as a safe investment option. I have invested in crypto trading platforms for about 10yrs thinking I was ensuring myself a retirement income, only to find that all my assets were either frozen, I believed my assets were secure — until I discovered that my BTC funds had been frozen and withdrawals were impossible. It was a devastating moment when I realized I had been scammed, and I thought my Bitcoin was gone forever, Everything changed when a close friend recommended the Capital Crypto Recover Service. Their professionalism, expertise, and dedication enabled me to recover my lost Bitcoin funds back — more than €560.000 DEM to my BTC wallet. What once felt impossible became a reality thanks to their support. If you have lost Bitcoin through scams, hacking, failed withdrawals, or similar challenges, don’t lose hope. I strongly recommend Capital Crypto Recover Service to anyone seeking a reliable and effective solution for recovering any wallet assets. They have a proven track record of successful reputation in recovering lost password assets for their clients and can help you navigate the process of recovering your funds. Don’t let scammers get away with your hard-earned money – contact Email: [email protected] Phone CALL/Text Number: +1 (336) 390-6684 Contact: [email protected] Website: https://recovercapital.wixsite.com/capital-crypto-rec-1
15.10.25 21:52
harristhomas7376
"In the crypto world, this is great news I want to share. Last year, I fell victim to a scam disguised as a safe investment option. I have invested in crypto trading platforms for about 10yrs thinking I was ensuring myself a retirement income, only to find that all my assets were either frozen, I believed my assets were secure — until I discovered that my BTC funds had been frozen and withdrawals were impossible. It was a devastating moment when I realized I had been scammed, and I thought my Bitcoin was gone forever, Everything changed when a close friend recommended the Capital Crypto Recover Service. Their professionalism, expertise, and dedication enabled me to recover my lost Bitcoin funds back — more than €560.000 DEM to my BTC wallet. What once felt impossible became a reality thanks to their support. If you have lost Bitcoin through scams, hacking, failed withdrawals, or similar challenges, don’t lose hope. I strongly recommend Capital Crypto Recover Service to anyone seeking a reliable and effective solution for recovering any wallet assets. They have a proven track record of successful reputation in recovering lost password assets for their clients and can help you navigate the process of recovering your funds. Don’t let scammers get away with your hard-earned money – contact Email: [email protected] Phone CALL/Text Number: +1 (336) 390-6684 Contact: [email protected] Website: https://recovercapital.wixsite.com/capital-crypto-rec-1