- NFTs were a great year in 2021, but the latest news about digital assets seems to be causing potential landscape problems.
- Regarding regulatory violations, the SEC has expressed concern about the creators of NFTs and the market.
- SEC lawyers have also extracted valuable information about token offerings that could be illegal in the last few months.
2021 has proved to be a great year for NFTs with the investment of celebrities and star players. However, the latest news about non-fungible tokens (NFTs) is not optimistic and shows potential problems with cryptocurrencies and other blockchain-based assets. Moreover, various regulators around the world have raised serious concerns about the ever-increasing hype around this asset class.
The US Securities and Exchange Commission (SEC) has expressed concern about NFT marketplaces and creators regarding regulatory violations. The SEC has also conducted a survey to determine if some people are also using NFTs for traditional security purposes.
According to some reports, SEC lawyers also lend subpoenas to extract information about potentially illegal token offerings in the past few months. Its target was a fractional NFT that allows people to hold and trade a share of their assets.
Recent crackdowns are expected to be in line with Gensler’s vision of keeping the crypto market under proper regulation. However, if the NFT clears the Howey Test, a SEC standard for determining whether a transaction contains an “investment contract,” the NFT is considered a security.
Hester Peirce, commonly known as “Cryptomama,” said in December last year that some NFTs could be under the influence of the SEC. In her interview, she explained that some NFTs could come under their jurisdiction due to the ever-expanding landscape. She also warned people that people should keep in mind that potential NFTs could hit the securities regulation system.
BlockFi, a popular cryptocurrency exchange, has recently been placed under SEC scrutiny. In February of this year, state regulators and the SEC fined $ 100 million. In the future, more exchanges may encounter a similar fate, given more and more scrutiny.
Many crypto exchanges face a similar fate by the SEC under Chairman Gary Gensler. The digital asset industry has also warned the CFTC to monitor regulations.
One of the key questions is whether digital assets, including NFTs, are securities. This is because in such situations the same rules apply as for stocks. Ripple Labs, the creator and distributor of XRP, had to experience a lot in this regard.
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