US SEC Commissioner Seeks Transparent NFT Policies

U.S. regulators have kept digital art creators and investors in the dark about which non-fungible tokens (NFTs) could qualify as securities, SEC commissioner Hester Peirce said. 

The U.S. stock market regulator's senior Republican member highlighted the possibility of regulating some NFTs like stocks or bonds in an interview with the Financial Times.

She called for the SEC to publish more market information, including the Bored Ape caricatures. U.S. securities laws could capture NFTs that include "governance rights" or offer investors rights to revenue streams, Peirce said.  

As retail investors have rushed to buy digital creations by artists and other enthusiasts, "NFTs is one particular area where we could provide some guidelines," she said. 

Peirce, one of five SEC members, has often diverged with chair Gary Gensler over cryptocurrency regulation. Gensler has taken a tough enforcement stance against the crypto market, which he has called the "wild west." 

He resisted crafting new rules for crypto markets, arguing that existing laws are sufficiently clear. 

In May, the SEC doubled the size of its enforcement team looking at cryptocurrencies, including NFTs. Her comments coincided with SEC's probe on Yuga Labs, the NFTs pioneer, and creator of the well-known Bored Ape Yacht Club collection.

The calls for more regulation have coincided with a slump in the NFT market.

In a Benzinga exclusive, Shark Tank's Kevin O'Leary voiced that regulating the crypto sector could bring stability and attract institutional investors to asset classes like non-fungible tokens (NFTs), stablecoins, and cryptocurrencies. Cryptos won't recover until there are concrete policies, he said.

The U.S. SEC will take notice and initiate regulations when more companies go bankrupt and more investor money is lost, O'Leary predicted.