SEC Considers Exempting NFT Fundraising From Securities Laws
The U.S. Securities and Exchange Commission (SEC) may soon provide regulatory clarity for NFTs, with senior commissioner Hester Peirce suggesting that certain fundraising projects could be exempt from securities laws.
Peirce, who leads the SEC’s Crypto Task Force, pointed to high-profile NFT projects such as "Stoner Cats" and "Flyfish Club" as potential candidates for exemption.
Speaking on the matter, Peirce stated,
“If we could provide some kind of framework or some kind of markers for [NFT issuers] to look to, I think it could be pretty helpful.”
She further indicated that the SEC could announce exemptions for specific types of NFTs, particularly those that focus on access-based utility rather than speculative investment.
The SEC’s Changing Stance on NFTs
The SEC, under former chair Gary Gensler, had taken a hardline approach to NFTs, treating many as unregistered securities.
This led to enforcement actions against projects like "Stoner Cats," an animated series produced by actress Mila Kunis, which raised $8 million through NFT sales.
Buyers of these NFTs received exclusive access to the show, and the project included a 2.5% resale royalty for creators.
Similarly, "Flyfish Club" raised $14 million by selling NFTs that granted membership to a private dining club, also incorporating resale royalties.
These enforcement actions, however, came at a time when the NFT market was already struggling.
According to DappRadar, NFT trading volumes fell by 19% in 2024, while overall sales dropped by 18%, marking the weakest performance since 2020.
Could Art NFTs Be Spared?
Peirce hinted that future SEC guidance could draw a distinction between art-based NFTs and those structured as securities.
While she acknowledged that some NFTs could still be classified as tokenized securities, she emphasised that utility-driven NFTs should not automatically fall under securities regulations.
She explained,
“You could have an NFT that’s a tokenized security, and it could be structured as an NFT. Obviously, that’s not going to be carved out.”
This suggests that while some projects might receive exemptions, others—especially those with investment-like characteristics—may still face regulatory scrutiny.
A Shift in Crypto Policy?
The SEC’s evolving stance on NFTs follows a recent decision to exclude proof-of-work crypto mining from securities classification.
Some industry experts see this as a sign that the agency may be shifting toward a more crypto-friendly regulatory framework.
Peirce also noted that regulatory policies are often influenced by political changes, hinting that the Commission’s approach to crypto could continue to evolve.
She stated,
“Spring signifies new beginnings, and we have a restart here, of the Commission’s approach to crypto.”
Meanwhile, in another major development, Canary Capital has submitted a filing for a new exchange-traded fund (ETF) tracking "PENGU," the governance token for the "Pudgy Penguin" NFT ecosystem.
The filing signals growing interest in NFT-related financial products, even as the market remains under pressure.
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