Cryptonews NFT News

Digital Chamber Asks Lawmakers to Classify NFTs as Consumer Goods As SEC Tightens Grip

The association advocates for NFTs to be classified as consumer goods, not financial products or securities, and seeks legislative clarity on this distinction.

Last updated: September 10, 2024 23:40 EDT

Crypto Reporter

Shalini Nagarajan

Crypto Reporter

Shalini Nagarajan

About Author

Shalini is a crypto reporter who provides in-depth reports on daily developments and regulatory shifts in the cryptocurrency sector.

Author Profile

Last updated:

September 10, 2024 23:40 EDT

Why Trust Cryptonews

Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

The Digital Chamber on Tuesday urged lawmakers to pass legislation that defines certain non-fungible tokens (NFTs) as consumer products. This would exempt them from federal securities laws.

The trade association requested that legislation affirm NFTs intended for consumer use are separate from financial products. Additionally, it stated that these should be exempt from SEC oversight. This would ensure they are not classified as securities or other financial instruments.

It comes in response to increased scrutiny from the Securities and Exchange Commission (SEC) into the NFT market.

The @SECGov’s overreach is putting the livelihoods of NFT creators and communities at risk. NFTs are primarily consumer goods—not securities. We need Congress to take action now and protect innovation, creators, and consumer rights. https://t.co/dp1fb2R3cf
— The Digital Chamber (@DigitalChamber) September 10, 2024

NFTs Are Not Securities, Digital Chamber Argues in Push for Legislative Clarity

The association represents a broad range of stakeholders in the digital economy. It argued that many NFT applications are not meant to be investment vehicles or speculative financial tools. Although some NFTs are resold for profit, the association insists this does not make them financial products.

“These items should be classified as consumer goods, not securities. TDC is advocating for legislative clarity that reflects this distinction,” it said.

Further, the association also criticized SEC Chair Gary Gensler’s enforcement-driven regulatory strategy. It argued that this approach jeopardizes the livelihoods of many who rely on NFTs. The association noted that individuals use NFTs for more than just personal passion projects. They also connect with communities and earn a living by selling or trading digital assets in this marketplace.

NFT Market Faces Legal Uncertainty as SEC and Courts Scrutinize Platforms Like OpenSea, DraftKings

Last month, the SEC issued a Wells Notice to OpenSea, asserting that some NFTs on the platform might be considered securities under US law. Traditionally, the SEC’s scrutiny has been directed towards cryptocurrency exchanges like Coinbase and Uniswap, along with other entities such as Kraken and Robinhood. Yet, by now targeting NFTs, the SEC is venturing into uncharted regulatory waters.

Meanwhile, DraftKings closed down its NFT operations following a class action lawsuit alleging their NFTs were unregistered securities. A federal judge’s decision to allow this case to move forward suggested a viable argument that DraftKings’ NFTs could indeed be classified as securities.

Similarly, Dapper Labs, known for NBA Top Shot, encountered a lawsuit with similar claims, highlighting ongoing legal challenges within the NFT sector.