David Edwards
The top non-fungible token (NFT) marketplace, OpenSea, has formally asked the SEC to elaborate on the fact that NFT markets are exempt from federal securities regulations. Adele Faure, the general counsel for OpenSea, and Laura Brookover, the deputy general counsel, wrote to Commissioner Hester Peirce, the head of the SEC’s Crypto Task Force, on April 9th, urging the agency to provide informal guidance that would exempt platforms such as OpenSea from being classified as securities exchanges.
NFT marketplaces, according to Faure and Brookover, are essentially different from conventional securities exchanges in that they don’t carry out trades, act as middlemen, or connect several vendors for the same item. They underlined that the NFT industry is quite uncertain as a result of the unclear regulations, and that the United States’ technological leadership in digital asset innovation is at danger.
“The Commission’s past enforcement agenda has created uncertainty,” the letter stated. “We therefore urge the Commission to remove this uncertainty and protect the ability of U.S. technology companies to lead in this space.”
The lawyers also pointed out that other digital asset sectors have received similar guidance. The SEC made it clear in early April that stablecoins that fit certain requirements are not securities, and the Division of Corporation Finance stated in February that memecoins are more like collectibles than securities.
Furthermore, OpenSea asked the SEC to reaffirm that broker-dealer registration should not apply to NFT exchanges. Platforms like OpenSea do not offer investment advice, hold customer funds, or carry out trades directly—all of which are crucial characteristics that are typically used to identify a broker, Faure and Brookover emphasized.
“In the longer term, we invite the Commission to exempt NFT marketplaces like OpenSea from proposed broker regulation,” the letter continued.
