Leaders and advocacy groups from the cryptocurrency and blockchain industry have criticized the United States Securities and Exchange Commission (SEC) and its chair, Gary Gensler, for issuing a Wells notice to non-fungible token (NFT) marketplace OpenSea.
OpenSea CEO Devin Finzer reported on Aug. 28 that the SEC had warned the NFT platform about a potential enforcement action. The Wells notice marked one of the few times the US regulator had considered labeling an NFT as an unregistered security under its purview, though it’s unclear whether the SEC will pursue enforcement against OpenSea.
“The SEC’s assertion that NFT platforms should be regulated as securities exchange is not only legally flawed but utterly ridiculous,” said Ji Kim, chief legal and policy officer at the Crypto Council for Innovation (CCI), in an Aug. 28 X post.
Source: Paul Grewal
In 2023, the SEC charged an entertainment company with conducting unregistered securities sales through NFTs. SEC Commissioner Hester Pierce expressed concerns at the time, implying that the regulator should have clarified whether the tokens qualified as securities.
“If NFTs are securities, everything collectible is a security,” said Uniswap Labs chief legal officer Katherine Minarik. “And that’s obviously not the law.”
Finzer pledged to “stand up and fight” any charges should the SEC choose to pursue an enforcement action, adding the platform would provide up to $5 million to cover legal fees for NFT creators and developers in similar positions. CCI CEO Sheila Warren suggested that Wells notice had been “spurred” by Gensler, who had not publicly commented on the case at the time of publication.
Gensler at center of enforcement debate
Since joining the commission in 2021, Gensler has spearheaded enforcement actions against several crypto and blockchain firms over alleged securities law violations, including Binance, Coinbase, Ripple, and Kraken. Though his term is scheduled to end in June 2026, many have called for the US presidential candidates to take a stance on Gensler’s tenure before the November election.
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As Gensler was appointed under US President Joe Biden, his Vice President and Democratic presidential nominee Kamala Harris may not publicly denounce any policies during her campaign to stand with the administration. In contrast, Republican Donald Trump said he intended to fire the SEC Chair “on day one” if reelected.
“Very disappointing to see [the SEC]’s continued regulation by enforcement, now targeting NFT marketplace OpenSea,” said North Carolina Representative Wiley Nickel on X. “The SEC and Gary Gensler should abandon this path and work with Congress to establish clear and fair regulations that foster innovation and keep jobs in the US.”
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