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

Decoding crypto and the markets. Daily, with Byron Gilliam.

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.

recent research

Research Report Templates (2).png

Research

We’re bullish on the PUMP token. We believe Pump.fun's brand strength, existing integrations, product roadmap, and strategic levers justify PUMP's TGE valuation, and expect the token to re-rate meaningfully higher in the months ahead.

article-image

Big blockers wasted a bitcoin fortune trying to prove a point

article-image

Coinbase’s newest acquisition includes the CEO and Head of Research from Opyn

article-image

Crypto’s highest purpose might be to make markets better by making them bigger

article-image

The non-profit’s “Project Open” seeks to let stocks trade directly on Solana

article-image

The acquisition is Pump.fun’s first, and comes just days before its planned ICO

article-image

As Trump’s tariff war reignites, everyone is assuming the dollar will continue its path lower. But the journey might be bumpy