SEC Commissioners push back against NFT enforcement action

Uyeda and Peirce believe questions around NFTs need to be answered before further enforcement actions

article-image

NOBUHIRO ASADA/Shutterstock modified by Blockworks

share

US Securities and Exchange Commissioners Mark Uyeda and Hester Peirce dissented against an enforcement brought by the agency on NFT sales deemed securities. 

The SEC on Monday charged a previously relatively obscure collection, Impact Theory, for its NFT launch, claiming that the NFTs were unregistered securities. The launch raised about $30 million, the SEC said. 

Pierce and Uyeda disagreed, with both commissioners saying the NFT sales in question don’t meet the Howey test — adding that the enforcement action pushes the SEC into unfamiliar territory, considering it marks the first such enforcement regarding an NFT issuer. 

Impact Theory was ordered to pay $6.1 million in penalties, and agreed to a cease and desist of its existing business practices, the SEC said. 

The company launched NFTs in the fall of 2021, and allegedly “encouraged potential investors” to see the purchase of their Founder’s Key’s NFTs as an investment in the business, spurring on the SEC’s action.

Both Peirce and Uyeda said American adults should be able to approach their finances as they see fit, but that they both understand where the Commission was coming from. 

“We do not routinely bring enforcement actions against people that sell watches, paintings, or collectibles along with vague promises to build the brand and thus increase the resale value of those tangible items,” the joint statement said.

The SEC worried about the NFT buyers not understanding where their money was going, and it raised a “legitimate concern,” though both Peirce and Uyeda say that it “is not a sufficient basis to pull the matter into our jurisdiction.”

Both Commissioners raised roughly nine questions around the enforcement action and the larger NFT landscape.

NFTs are not a one-use case asset class, they said, and different NFTs have a variety of use cases. There could, as a result, need to be fresh SEC categories to determine how securities laws apply to both offers and sales, they said. 

Read more: Maui wildfire recovery gets the spotlight thanks to charitable NFT collection

They wonder therefore if there needs to be categories used by the SEC to figure out how current securities laws apply to both offers and sales. 

And since the SEC ordered Impact Theory to destroy NFTs in its possession, the two Commissioners wonder what type of precedent has been set.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

kamino cover.jpg

Research

Kamino has solidified its position as the leading money market on Solana and is emerging as a DeFi bluechip. Although DeFi competition is fierce, Kamino has kept iterating on its product to provide the best-in-class UX, paired with a robust risk management framework and battle-tested infrastructure. Given the rollout of Kamino Lend V2, the protocol may scale aggressively over the coming months, penetrating previously untapped markets in Solana DeFi.

article-image

Republican challenger Bernie Moreno captured the industry’s attention when he went up against a key member of the so-called “anti-crypto army”

article-image

Swan Bitcoin managing director John Haar is among those expecting that the election may only have a short-term impact on crypto markets

article-image

As part of the deal, Arcium will take over Inpher’s core team and technology: Lightspeed exclusive

article-image

Platforms like Polymarket and Drift’s BET show higher probabilities for a Trump victory, reflecting current market sentiments

article-image

While DAOs promote transparency and community involvement, underlying centralized mechanisms reveal the challenges in achieving full decentralization

article-image

Also in the tokenized fund space, Franklin Templeton launches on Base and Securitize hits $1 billion in tokenized RWA onchain