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The Digital Chamber, a prominent crypto and blockchain advocacy group, is pushing for legislation that would classify certain non-fungible tokens (NFTs) as consumer products, shielding them from federal securities regulations. This comes as the U.S. Securities and Exchange Commission (SEC) signals potential enforcement actions against OpenSea, one of the leading NFT marketplaces.
In a statement issued on September 10, the Digital Chamber described the SECâs actions as overreach into the digital asset sector. The advocacy group is calling on Congress to clearly define NFTs within U.S. law, arguing that the SEC should not treat many NFTs as financial products or securities.
SECâs Action on OpenSea
The SECâs move towards regulating NFTs has been evident since OpenSea received a Wells notice on August 28, indicating the agencyâs intention to pursue an enforcement action. However, the SEC had yet to file a lawsuit at the time. OpenSea, which faced a security breach last year, has called the Wells notice âa move into uncharted territory.â
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Digital Chamberâs primary concern is the lack of legislative clarity, which has allowed the SEC to adopt a regulation-by-enforcement approach under the leadership of SEC Chair Gary Gensler. The group argues that this creates risks for the digital asset industry. Many NFT applications, they claim, are designed as collectibles or consumer goods, not financial tools meant for investment or speculation.
NFT Industryâs Scrutiny
The Wells notice against OpenSea isnât the SECâs first action in the NFT space. In 2023, the agency charged entertainment firm Impact Theory for conducting unregistered securities sales through its âFounderâs Keysâ NFTs, leading to a $6 million settlement. Similar cases have been brought against Dapper Labs for its NBA Top Shot NFTs and DraftKings for allegedly offering unregistered securities through their NFT products.
As regulatory pressures increase, the Digital Chamber is advocating for clearer rules that distinguish between NFTs meant for speculative investment and those created as consumer goods. The group insists that Congress needs to act swiftly to prevent the industry from falling victim to regulatory uncertainty.
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The future of NFT regulation may also hinge on the upcoming U.S. elections. Former US President Donald Trump has vowed to remove Gensler if reelected, while some in the crypto industry speculate that a Democratic victory under Kamala Harris could shift the regulatory landscape.
