The SEC investigates collectible NFTs for violating regulatory rules

The investigated NFT collections could be acting as securities by offering royalties to their users

According to a report published by Bloomberg over the past week, the lawyers for the US Securities and Exchange Commission (S.E.C) have issued multiple subpoenas requesting information about NFT offerings in recent months.

The SEC is trying to determine if certain non-fungible tokens are being used illegally to raise money like traditional securities. The securities are considered as financial instruments that can be exchanged for other equivalents (in other words, fungibles).

Securities are therefore negotiable and can be used to raise capital in public and private markets. The first transactions where shares are first sold form what is known as the primary market.

Among the types of securities that we can find are those that can be obtained in the form of social capital, they allow obtaining capital gains when securities are sold, in case they have increased in value.

Based on this article, the U.S. regulatory entity would seek to investigate whether some digital collectibles offer compensation schemes to their users in the form of royalties for sales in secondary markets.

If that were the case, the SEC would take it as a violation of securities regulations due to the reason that in U.S securities sold must be registered. Previously, there has been no official statement from the SEC, the regulatory entity has not yet published an Interpretative Letter regarding non-fungible Tokens.

Some NTF platforms have begun to move based on these regulations, leaving NFTs collectibles that could be implicated in these investigations. However, an anonymous source from the Crytomonday, indicated that this could be the opening for the entity start considering NFTs as securities.

About SEC
The U.S. Securities and Exchange Commission is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The SEC’s regulation of the securities markets facilitates capital formation, which helps entrepreneurs start businesses and companies grow, in order to enforce the law against market manipulation.