Digital Chamber rallies support for NFT act amid SEC scrutiny

Digital Chamber is calling on U.S. crypto users to support a new bill that would classify non-fungible tokens (NFTs) based on their use cases. The goal is to protect the burgeoning non-fungible token (NFT) industry from stringent securities regulations.

Last week, the organization urged Congress to define some NFTs as consumer products, exempting them from federal securities laws. Digital Chamber argued that many NFTs, like art and traditional collectibles, should be treated as consumer goods, not securities.

U.S. Representative William Timmons introduced the New Frontiers in Technology Act (NFT Act), which is designed to address the legal and regulatory classification of NFTs.

NFT Act aims to protect artistic and intellectual use cases

The NFT Act, according to the Digital Chamber, safeguards “covered NFTs” by defining them as items primarily used for artistic, musical, literary, or intellectual purposes. It also extends protection to NFTs related to rewards, rights, licenses, or tickets. However, this bill would not protect NFTs marketed as investment products with the promise of financial gain.

Additionally, the Act promotes education by instructing the U.S. Comptroller General to conduct a study on NFTs once the bill is passed.

The Digital Chamber has urged Americans to contact their representatives to express support, arguing that the legislation will foster innovation, enhance consumer protection, and help establish the U.S. as a global hub for blockchain technology.

The SEC is cracking down on NFTs as the new bill is introduced

This legislative push follows recent actions by the U.S. Securities and Exchange Commission (SEC) against NFT platforms. On Aug. 28, the SEC issued a Wells notice to OpenSea, signaling potential enforcement actions. 

Wendy O, host of CryptoWendyO, shared their thoughts:

I just think it’s absolutely ridiculous… the public servants really haven’t done that great of a job of providing any kind of guidance… we’re seeing a direct attack on American entrepreneurs. To me, it’s an epic fail… there’s bad actors in every single industry, but to go after one of the largest platforms is absolutely ridiculous and absurd. ~Wendy O

On Sept. 17, the SEC fined Flyfish Club $750,000 for selling NFTs, which the agency argued violated securities laws. According to a cease and desist order issued on September 16, the SEC stated that Flyfish “conducted an unregistered offering of crypto asset securities” by selling 1,600 NFTs to US investors and earning $14.8 million at two pricing points.

Still, SEC commissioners Hester Peirce and Mark Uyeda criticized the enforcement action, claiming that the Flyfish NFTs were “simply a different way to sell memberships” and thus did not violate securities laws.