SEC Reportedly Targets NFT Market Over Potential Violations of Securities Law

The inquiry is looking into whether NFTs “are being utilized to raise money like traditional securities,” Bloomberg reported

article-image

Blockworks exclusive art by axel rangel

share

key takeaways

  • The SEC is especially seeking information on fractional NFTs
  • NFTs can be deemed securities if they pass the “Howey Test,” a regulatory standard used to determine if a transaction has an investment contract

The SEC is investigating NFT creators and cryptocurrency exchanges over potential violations of securities law, according to Bloomberg. 

The probe is looking into whether NFTs (non-fungible tokens) “are being utilized to raise money like traditional securities,” unnamed sources told the news outlet. 

The federal agency is seeking information, in particular, on fractional NFTs — cryptoassets that have been divided or securitized, allowing many investors to own a fraction.

NFTs can be deemed securities if they pass the so-called “Howey Test,” a regulatory standard used to determine if a transaction has an “investment contract,” according to the SEC.

SEC Commissioner Hester Peirce may have previously signaled an inquiry during an interview with Coindesk TV last December.

“Given the breadth of the NFT landscape, certain pieces of it might fall within our jurisdiction,” Peirce said. “People need to be thinking about potential places where NFTs might run into the securities regulatory regime.”

Qualifying as a security and meeting regulatory requirements, however, have been points of uncertainty for crypto startups. A class action complaint was filed last year against NFT creator Dapper Labs, alleging that some of the digital collectibles were acting as unregistered securities.

The SEC did not immediately respond to a request for comment.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 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.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates (1).jpg

Research

Jupiter has emerged as the undisputed liquidity backbone of Solana, commanding over 90% of spot DEX aggregation and 80% of perp trading volume. But behind the numbers lies a far more ambitious play: a cross-chain, vertically integrated super-app spanning swaps, synthetics, NFTs, memecoins, and launchpads. This report explores Jupiter’s rapid rise, the monetization upgrades reshaping its revenue profile, and the risks that could unwind its dominance, from token dilution to competition. With annualized revenues nearing $300M, the upside is undeniable, if it can navigate the turbulence.

article-image

Immutable has been building a game with Ubisoft that was slated to unveil in April. It may be a TCG.

article-image

Curve founder Michael Egorov is working on a new protocol designed to eliminate impermanent loss, rethink token emissions, and capture BTC-native yield

article-image

Mining outfits have gone bust in the wake of prior halvings. Not so this time around.

article-image

Zora’s announcement that its token is for “fun only” sparked a debate about the need for such tokens

article-image

In recent weeks, Helium has hit new all-time highs while passing major protocol milestones

article-image

Financial advisers in a January survey said equity ETFs were their top choice for gaining crypto exposure in 2025