Members of the SEC speak out against NFT enforcement
Uyeda and Peirce argue that further research is needed on NFTs before enforcement measures may be taken.
Mark Uyeda and Hester Peirce, two US Securities and Exchange Commissioners, voiced their disagreement with an enforcement action taken by the agency over the selling of NFTs that were considered securities.
Impact Theory, a previously unknown collection, was hit with SEC charges for its NFT debut on Monday, with the SEC alleging that the NFTs were unregistered securities. According to the SEC, the launch brought in over $30 million.
Since this is the first time the SEC has taken enforcement action against an NFT issuer, Commissioners Pierce and Uyeda dissented, arguing that the relevant NFT sales do not satisfy the Howey test.
According to the SEC, Impact Theory has been fined $6.1 million and has agreed to end its current business practices.
In the autumn of 2021, the firm issued its first NFTs, and the SEC is now investigating whether or if the corporation “encouraged potential investors” to consider the purchase of its Founder’s Key NFTs to be an investment in the company.
Peirce and Uyeda agree that people in the United States should be free to handle their own money as they see appropriate, but they can appreciate the Commission’s point of view.
About nine queries were addressed by both Commissioners about the enforcement action and the NFT industry as a whole.
They argued that NFTs are not a monolithic asset class, with each kind of NFT serving a unique purpose. Accordingly, they suggested that the SEC create new classifications for analyzing offers and transactions in light of existing securities rules.
As a result, they are curious as to whether the SEC really needs to use categories in order to determine how the existing securities rules apply to both offers and sales.
The two Commissioners are concerned that a dangerous precedent has been formed when the SEC ordered Impact Theory to destroy the NFTs in its possession.