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- The Securities and Exchange Commission (SEC) in the United States is apparently investigating a young sector of the digital asset business for potentially illegal crypto-asset offerings.
- The goal of the agency is to determine whether NFTs qualify as securities.
According to Bloomberg, anonymous sources familiar with the situation said the SEC’s investigation will focus on whether non-fungible tokens (NFTs) are being used to generate money in the same manner that traditional securities are.
The goal of the agency is to determine whether NFTs qualify as securities and thus fall under the same federal regulations as stocks and other traditional commodities.
In search of unlawful cryptocurrency operations
The SEC has been on the watch for unlawful cryptocurrency operations before. In a high-profile case in 2020, the regulator sued Ripple Labs, a San Francisco-based payments company, for allegedly selling crypto-asset XRP as an unregistered security.
The Securities and Exchange Commission (SEC) compelled Coinbase to drop plans to provide a high-yield stablecoin savings product last year.
According to Bloomberg, the SEC’s investigation will focus on fractional NFTs, or NFTs that have been divided up into smaller units that can be traded, to see if they violate any of the regulatory body’s rules.
ALSO MEAN – Large chunk of XRP is being scooped by whales
SEC’s arrangement with BlockFi
In addition, the regulatory agency is said to have secured an arrangement with BlockFi, a famous crypto lending company.
Chairman Gary Gensler has been outspoken in his support for regulatory monitoring of the digital asset business and has been fighting the Commodity Futures Trading Commission for it. While the CFTC has been regulating bitcoin as a commodity, agency chair Rostin Behnam recently urged the Senate for a bigger role in regulating the crypto-asset business, which might put the SEC’s plans on hold.
What exactly are NFTs and how do they work?
A digital asset that depicts real-world components such as art, music, in-game commodities, and movies is known as an NFT. They’re commonly encoded using the same software as many other cryptos, and they’re bought and traded online, frequently with bitcoin.
NFT stands for Non-Fungible Token, which is a one-of-a-kind digital asset that belongs exclusively to its owners. One would have to mint an NFT from a digital asset in order to produce one. Digital works, digital collectibles, films, and anything else that can be digitalized are all popular NFTs.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
