The Chamber of Digital Commerce (TDC) has urged Congress to pass legislation that would define certain non-fungible tokens (NFTs) as consumer goods and exempt them from federal securities laws.
The move comes in the wake of growing concerns over recent enforcement actions by the Securities and Exchange Commission (SEC), including the issuance of a Wells Notice to NFT marketplace OpenSea.
Classification of NFTs
In a statement released on September 10, TDC argued that NFTs created for consumption purposes, such as digital art, collectibles and video game assets, should not be classified as financial instruments.
Instead, the group argues that these tokens should be treated like traditional consumer goods. The Chamber of Digital Commerce emphasized that NFTs are often purchased for personal use, not as an investment, and that they do not constitute securities even if they are occasionally resold for profit.
According to the statement:
“TDC's 2023 Pixels to Policy report makes clear that many NFT applications are not designed as investment contracts or speculative financial tools.”
The group stressed that the secondary market function of NFTs does not inherently make them financial products, like traditional collectibles or works of art.
SEC Abuse of Power
The Chamber's call comes as the SEC launches a series of actions targeting NFT platforms, with recent cases against companies such as DraftKings and Dapper Labs raising alarm in the digital asset industry over concerns that over-regulation could stifle innovation.
The SEC's recent enforcement action against OpenSea, one of the largest NFT marketplaces, has further fueled concerns.
“SEC Chairman Gary Gensler's mandated regulatory approach puts at risk the livelihoods of countless people who rely on NFTs to pursue their passions and sustain their businesses.”
The group warned that a lack of clarity in current laws is driving NFT creators and companies to overseas locations where regulations are more favorable.
TDC urged Congress to clarify that consumer NFTs do not fall under the SEC's jurisdiction, citing the risk that continued uncertainty could have a negative impact on the industry and the U.S. economy as a whole.
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