America's financial cops say Impact Theory's NFTs were unregistered securities In its first enforcement action concerning the issuance of non-fungible tokens, or NFTs, if you can remember that sad fad, the SEC has declared they should be considered and thus regulated as conventional securities under some circumstances. That would mean, in those cases, those offering the tokens must follow the rules laid …
Unregulated and poorly regulated markets have the potential to make a mess of the real economy, which is why people like the SEC jump on them.
Bubbles & panics were a major feature of the 19th century American economy, and the people who look after it are well aware. They're not going to let it happen again.
"Unregulated and poorly regulated markets have the potential to make a mess of the real economy"
...and even markets that *seem* to be very well-regulated can, in fact, have the regulators completely drop the ball resulting in a giant mess (see subprime mortgage crisis)
Generally speaking, I think that typical NFTs, which are marketed and bought/sold as unique artistic artifacts, should in fact be treated in the same way as a painting or a valuable watch.
BUT
In this specific case, from the description given in the article, these NFTs were linked to the ownership of the company: "...a way to *obtain a stake in the business* in its early days" and "...akin to *buying into* Disney while it was working on Steamboat Willie", in which case they are definitely a security and should be treated as such.
While I am certainly not a fan of NFTs, I don't see a clear bright-line test that makes them in the general case any different from various traditional art products, except in not having a tangible realization (like a physical painting). Since the latter also applies to, for example, an ebook that's never published in print form, it doesn't seem like a useful test.
I do agree with jmch's evaluation here that these particular NFTs were being marketed as securities, however. Peirce and Uyeda have a point: just declaring NFTs to be securities in general seems problematic.
(Those two commissioners have interesting history. They're the only two current SEC commissioners affiliated with the Republican party, but Uyeda was nominated by Biden, and Peirce was originally nominated by Obama. That nomination was blocked by Democrats in the Senate, and Trump re-nominated her.)
a major feature of the 19th century American economy
You really don't have to go that far back. The problem is that regulatory action is often necessarily after the event.
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