So have big players like OpenSea, the leading NFT marketplace. In addition, they recently made an official request to the U.S. Securities and Exchange Commission (SEC) to exempt NFT marketplaces from federal securities laws. The firm has been urging the SEC to issue detailed guidance on this matter. Their focus, just like ours, is to make sure that U.S. technology firms can continue to lead the digital asset class. In its response, OpenSea asserts that its platform is not an exchange. They think this allows them to stay away from the definition of securities under current laws.
As stated on OpenSea’s website, OpenSea is not an investment adviser, does not conduct transactions, nor act as a custodian of customer assets. The purpose of this request The company makes abundantly clear that it does not act as an intermediary. It prevents auctioning an asset to many different potential buyers.
Adele Faure, OpenSea's general counsel, and Laura Brookover, deputy general counsel, articulated the company's position in a formal statement.
“The Commission’s past enforcement agenda has created uncertainty. We therefore urge the Commission to remove this uncertainty and protect the ability of US technology companies to lead in this space,” - Faure and Brookover
The SEC’s been on a roll lately, having recently dropped a slew of enforcement actions against crypto firms. This includes investigations into OpenSea, marking a possible change in the SEC’s regulatory posture. On Friday, OpenSea announced that it too had paused its airdrop reward system after users criticized the decision.
“In preparing this guidance, the Crypto Task Force should specifically address the application of exchange regulations to marketplaces for non-fungible assets, similar to the recent staff statements on memecoins and stablecoins,” - Faure and Brookover
While OpenSea generally refuses to comment on ongoing litigation, it has repeatedly stated that it does not qualify as an exchange under U.S. securities laws. The company is trying to get some clarity from the SEC in order to avoid regulatory overreach that would kill innovation before it begins.
“We ask the SEC to clear the existing industry confusion on this issue by publishing informal guidance. In the longer term, we invite the Commission to exempt NFT marketplaces like OpenSea from proposed broker regulation,” - Faure and Brookover
