SEC Looking Into The NFT Market To Recognize Tokens That Has Similar Features Like Securities And Regulated Assets

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NFT market is flourishing and many are slowly getting curious about this new way of investing. Today there are thousands of NFT creators and NFT buyers who are trading with the help of NFT exchanges. It is a highly unregulated market that does not come under governmental control. NFTs are not securities and thus are not needed to be transacted based on the securities laws in place.

However, only recently, the Securities and Exchange Commission or SEC has raised some doubts regarding the NFT. As per them, some of the NFTs that are traded may come into the category of securities. This means these NFTs will be regulated as per the laws in the proof to be a security.

SEC Looking Into The NFT Market To Recognize Tokens

In December last year, the commissioner of SEC Hester Peirce mentioned that SEC is planning to look into the NFT market more closely. Commissioner is also called a Crypto Mom as from re-beginning, Peirce has shown pro-crypto sentiments.

Hester Peirce mentioned that there is a large possibility that some of the NFTs come under the purview of securities as they may have a similar objective as regular security. This is because of the fact that today NFT market has grown drastically. A wider network of NFT has included many tokens under the umbrella. This has increased the chances of some coming into the fungible asset category.

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They are mostly targeting the fractional NFTs. They believe that some of the fractional NFTs are an asset that is used to raise money just like any class of security in the private market. If so proven, these NFTs will come under a similar regime as security.

Securities are a class of assets that are traded in the private and public markets to raise money and earn profit. Usually, company bonds, shares, etc., come into this category.

Fractional NFTs are the ones that are a smaller part of a single NFT token, the parts are divided, and then they are bought and sold with the help of smart contracts. Lately, SEC has sent subpoenas to several creators of NFTs. This is done to get more information on these NFTs.

From the very beginning, the SEC has wanted to dig deep into the cryptocurrency market and see if they fall under the regulated field. Bitcoin and Ethereum do not fall under this category because one is a currency, and the other one is not handled by any one group. But, XRP has fallen under this category and which caused ripple labs to undergo tiring lawsuits for months. SEC has probed ICOs or initial coin offerings as well, which took place in 2017-2018.

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Who is SEC?

Securities and Exchange Commission is part of the federal government of the United States. It was formed in the year 1934 and was devised after the most unfortunate Wall Street crash the country faced in 1929. This commission was created to keep a check on the securities and crate laws against any type of manipulation of the market. Their main objectives are to maintain an efficient and fair market, keep the investors protected from manipulation and fraud and help the formation of capital. It is based in Washington and is currently headed by Gary Gensler.

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