Forex in this article
• It appears that the SEC is considering jurisdiction over the NFT market
• Partial NFTs targeted by stock exchange regulators
• Will Ripple become the scheme?
Non-fungible tokens, called NFTs, are among the latest trends in the cryptocurrency market. In 2021, the speed of circulation of virtual goods has increased, and in 2022 it seems that the demand for NFT in the market has not stopped. This recently brought on the scene the US Securities and Exchange Commission (SEC) US stock watchdog, who wants to take a closer look at the NFT market.
NFTs: an extensive planned investigation إجراء
As reported by news portal Bloomberg, the US Securities and Exchange Commission wants to launch a comprehensive investigation into the NFT market. The investigation, which covers both NFT originators and crypto exchanges, will focus on whether certain assets violate SEC’s crypto regulations, according to people familiar with the matter.
Accordingly, it has to be specifically about whether certain non-financial financial assets, i.e. digital assets, are “used to raise funds for traditional securities,” as Bloomberg writes as well. For example, the authority has requested some information about certain token offerings in recent months.
Fractional tokens in focus
Market watchers seem to have caught the eye of the field of NFTs (partial tokens), which are broken down into smaller units and can therefore be bought and sold more easily, according to a media report.
Hester Pierce, a crypto-friendly commissioner at the SEC, had already explained a few months ago why US securities regulators are interested in the NFT market. In an interview with “CoinDesk TV” she confirmed: “Given the breadth of the NFT landscape, certain parts of it can fall within our purview.” One has to think about where “NFTs could fall under the Securities Regulations”.
Are NFTs securities or not?
The question of whether non-fungible tokens are securities in the actual sense, the regulation of which thus falls within the purview of the SEC, has been on the minds of investors for some time.
While many NFT fans view digital certificates of authenticity as a tradable asset but different from securities like stocks, critics often argue that the tradability of NFTs in particular would classify them as securities in the truest sense. The Securities and Exchange Commission would like to examine such a potential classification, particularly in the case of partial NFTs.
But unlike asset classes like stocks, NFTs are not traded daily and regularly in a liquid market – but only when the owner initiates a sale and the price is determined in that context.
To determine whether an asset is a security without a doubt, the US Securities and Exchange Commission uses the so-called Howey test. This classifies assets as securities – and therefore subject to the jurisdiction of the Securities and Exchange Commission – when investors invest their money in a company to benefit from the decisions of the company’s management. Perhaps the NFTs as a whole should not be classified as securities in the course of testing, but the exchange supervisory authority may come to a different conclusion for some NFTs.
Does the Ripple rating point the way?
For some time now, the Securities and Exchange Commission (SEC) has been struggling with potential responsibilities in the crypto space. There is also the question of whether cryptocurrencies are securities that need to be regulated by the Securities and Exchange Commission. The exchange’s supervisory authority has been in a legal dispute with Ripple for nearly a year. Specifically, the Securities and Exchange Commission filed a lawsuit against the crypto company because in its view, its cryptocurrency is a security and therefore the sale of the XRP token must first be approved by the executives. Ripple defends itself against this argument and maintains that XRP is not subject to securities laws because other cryptocurrencies such as Bitcoin can also be traded as commodities, and thus are not under the jurisdiction of the SEC. However, in this case, Howey’s test will speak on behalf of the exchange’s moderators, since the Ripple token was created by the company itself and used to fund its own business – which in turn would be an investment for the company. A verdict in this case is expected in April, which could also point the way to classify NFTs.
finanzen.net editorial office
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