SEC Probing NFT Market: Report

At issue is whether certain tokens should be considered securities and thus regulated.

Mar 2, 2022 at 11:04 p.m. UTC

Updated Mar 3, 2022 at 1:14 a.m. UTC

SEC (Joshua Roberts/Bloomberg via Getty Images) — The headquarters building of the U.S. Securities and Exchange Commission (SEC) stands in Washington, D.C., U.S., on Monday, May 10, 2010. The chief executive officers of the biggest U.S. stock markets were called to a meeting at the SEC today to discuss last week�s selloff in equities, according to four people familiar with the situation. Photographer: Joshua Roberts/Bloomberg via Getty Images

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The Securities and Exchange Commission (SEC) is investigating whether certain non-fungible tokens qualify as securities and thus should be regulated, according to a report from Bloomberg, citing sources familiar with the matter.

Over the last few months, SEC attorneys have sent subpoenas to NFT creators and various crypto exchanges requesting more information, according to the report.
A particular focus of the probe are fractional NFTs, in which a token is broken down into many units that are sold separately, according to the sources.
SEC Commissioner Hester Peirce, known affectionately as “Crypto Mom” for her pro-crypto views, told CoinDesk TV in December that the SEC might soon be taking a closer look at NFTs.
“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.”
SEC chief Gary Gensler has previously said that he believes many crypto tokens are likely securities that should fall under the purview of the SEC.
The SEC’s Howey test considers something a security if it involves investors putting money into an asset with the intention of making a profit.

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