OpenSea is fighting the notion that it would be subject to regulation as a broker under the Exchange Act. The company maintains that its non-fungible-token (NFT) marketplace does not need to be regulated like a traditional securities exchange. The company has gone to great lengths to make sure users know it’s not providing investment advice. It describes how it neither negotiates nor consummates trades, custody user assets, or facilitates loans, distinguishing itself from a classic broker.
The appeal follows OpenSea’s receipt of a Wells notice from the SEC, a written indication that the Commission intends to pursue an enforcement action. Related News OpenSea’s letter to SEC Commissioner Hester Peirce In it, they referenced the SEC v. Coinbase ruling, claiming that their operations are the same as Coinbase’s, since they offer wallet software and access to pricing information.
OpenSea emphasizes that its role is limited to "allowing people to discover NFTs and connect with buyers and sellers," functioning more as an interface than a financial intermediary. The company further distinguishes itself from exchanges trading fungible securities by asserting that its NFTs are non-fungible by their very nature. According to OpenSea, promoting certain listings or emphasizing which NFTs are popular or trending does not constitute investment advice. What it doesn’t indicate is that they’re playing an intermediary role.
To address regulatory uncertainty, OpenSea has urged the SEC to issue informal guidance clarifying that NFT marketplaces are not subject to exchange or broker regulations.
"We propose that the SEC clearly state that NFT marketplaces like OpenSea do not qualify as exchanges under federal securities laws." - OpenSea
We applaud OpenSea’s suggestion to propose an interpretive release or a staff no-action letter to explain how Rule 3b-16 applies to NFT marketplaces.
"This clarification would offer immediate benefits to NFT collectors, buyers, and sellers, as well as the broader NFT ecosystem, by removing regulatory uncertainty." - OpenSea
