Commissioner Says SEC Must Clarify Which NFTs Will Be Regulated

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

In an interview with the Financial Times, the US stock market regulator’s senior Republican member said some NFTs could be regulated like stocks or bonds. She called for the SEC to publish more information on the market, which includes the Bored Ape caricatures.

NFTs that include “governance rights” or offer investors rights to revenue streams could be captured by US securities laws, Peirce said. Tokens that are split and then sold off could also fall into this category.

As retail investors have rushed to buy digital creations by artists and other enthusiasts, “NFTs are one particular area where we could provide some guidelines,” she said. “What would be the harm in us going out with something like that?”  Peirce, one of five SEC members, has often split 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 has urged digital asset platforms to register with the regulator and deems most tokens to be securities. The SEC chair has resisted crafting new rules for crypto markets, arguing existing laws are sufficiently clear. In May, the SEC doubled the size of its enforcement team looking at cryptocurrencies, including NFTs.