Two SEC Commissioners Oppose SEC's Enforcement Actions Against NFTs

Author: Katherine Ross, Blockworks; Compiler: Songxue, Jinse Finance

**SEC Commissioners Mark Uyeda and Hester Peirce take issue with the SEC's enforcement of NFT sales as securities. **

On Monday, the U.S. Securities and Exchange Commission (SEC) charged NFTs issued by previously relatively unknown Impact Theory, claiming that NFTs are unregistered securities. The offering raised about $30 million, the SEC said.

Pierce and Uyeda disagree with this allegation, with both commissioners stating that related NFT sales do not meet the Howey test, adding that the enforcement action pushes the SEC into unfamiliar territory because it marks The first such enforcement against an NFT issuer.

Impact Theory was ordered to pay a $6.1 million fine and agree to cease its existing business practices, the SEC said.

The company, which launched the NFT in the fall of 2021, allegedly "encourages potential investors" to view the purchase of an NFT of its Founder's Key as an investment in the business, prompting the SEC to take action.

Both Pierce and Uyeda said that American adults should be able to handle their own finances as they see fit, but they both understood what the SEC was trying to do.

"We will not routinely take enforcement action against anyone who sells watches, paintings or collectibles with vague promises to build a brand that increases the resale value of these tangible items," the joint statement said.

The SEC has raised "legitimate concerns" about NFT buyers not knowing where their money is going, though both Peirce and Uyeda said, "This is not a sufficient basis for bringing this matter under our jurisdiction" .

The two commissioners asked about nine questions around enforcement actions and the broader NFT situation.

They said that NFT is not an asset class with a single use case, and that different NFTs have multiple use cases. As a result, the SEC may need a new taxonomy of acts to determine how securities laws apply to asset offerings and sales, they said.

Since the SEC ordered Impact Theory to destroy the NFTs it owns, the two commissioners wondered what kind of precedent this set.