Insights on NFT Regulation
During the SEC Speaks event on Monday, Hester Peirce, the commissioner at the helm of the newly formed SEC Crypto Task Force, shared her insights regarding the regulatory classification of non-fungible tokens (NFTs). Peirce pointed out that while the majority of NFTs do not meet the criteria to be labeled as securities, there are specific cases, particularly those designed to generate ongoing revenue for creators, which may not fall under federal securities laws.
Role of the SEC Crypto Task Force
Since taking charge of the task force in January 2025, Peirce has been pivotal in the SEC’s initiative to clarify regulations within the rapidly evolving cryptocurrency market. The task force she leads is focused on establishing a clearer framework for regulating assets like NFTs and stablecoins, reflecting an overarching goal of the agency to shed light on this often nebulous domain.
Crypto Mom’s Advocacy
Known in the industry as “Crypto Mom” for her outspoken dissent against the SEC’s enforcement strategies targeting cryptocurrency companies, Peirce emphasized that many NFTs lack the economic characteristics typical of securities. Specifically, she mentioned NFTs that facilitate creator royalties, highlighting their operation through smart contracts. These mechanisms enable artists to receive a percentage of the resale price each time their NFT goes to a new owner, akin to how creators are compensated for their work on streaming platforms.
Call for Guidance and Collaboration
Peirce’s delineation of NFTs as non-securities highlights a call for the SEC to provide formal guidance on their regulatory status, as the agency has yet to issue any definitive clarifications regarding these digital assets, which has led to uncertainty in the regulatory landscape.
Her advocacy signals a desire for the SEC to develop clearer and more precise governing standards.
Under Peirce’s guidance, the SEC Crypto Task Force has actively engaged with industry participants through multiple roundtable discussions and public submissions, collaborating with legislators to navigate the intricate regulatory environment surrounding cryptocurrencies. This represents a notable shift from the previous administration under former chairman Gary Gensler, who exhibited a cautious and skeptical stance towards crypto innovations.
Complexities of Digital Assets
Although Peirce’s remarks primarily addressed NFTs devoid of security-like attributes, she also acknowledged the complexities and ambiguities surrounding other digital assets that may straddle the line between being regarded as securities or not. She urged for a focus on the “economic realities” of these assets, suggesting that the essence of their functionality should guide their regulatory classification. As the crypto sphere continues to expand, Peirce highlighted the critical need for establishing transparent guidelines that support market growth while ensuring robust investor safeguards.
