SEC Petitioned On NFTs, NFT Platform Sued In Class Action As More NFTs Launch

A broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) recently petitioned the SEC for rulemaking regarding non-fungible tokens (NFTs). According to the petition, the issue of when an NFT is a security is unclear and requires analysis by qualified legal counsel, which is cost-prohibitive to early-stage companies, which are the main drivers of innovation in the fintech space. The petition states that an NFT that is a security triggers the securities regulatory regime, which could also require companies with activities that involve NFTs to register as a broker-dealer, an exchange or an alternative trading system. The petitioner notes that NFTs have not been the subject of SEC interpretative guidance and the SEC has not initiated an enforcement action against the creator of an NFT or the operator of a platform that facilitates the offer and sale of NFTs. Consequently, the petitioner