American advocacy group Digital Chamber, which is committed to promoting the emerging industry behind blockchain technology, has asked lawmakers to classify non-fungible tokens (NFTs) as consumer goods.
NFTs have come under regulatory scrutiny, prompting structural adjustments for key players in the sector.
Digital Chamber Slams SEC for Attacking NFTs
The Digital Chamber (TDC) criticized the US Securities and Exchange Commission (SEC) for its regulatory overreach regarding NFTs. The advocacy group is calling for NFTs to be classified as “consumer goods” and is urging policymakers to take action to protect innovation, creators, and consumer rights.
“Many NFT applications are clearly not designed as investment contracts or financial tools for speculation, even if consumers occasionally sell NFTs for a profit. This secondary market feature does not make them financial products. These items should be classified as consumer goods, not securities. TDC is advocating for legislative clarity that reflects this distinction,” Digital Chamber wrote.
The advocacy group reached this conclusion after conducting an in-depth study of the NFT ecosystem. TDC claims that SEC chair Gary Gensler is jeopardizing the livelihoods of individuals in the NFT market. This frustration extends to NFT-related firms such as DraftKings, Dapper Labs, and OpenSea, which have faced scrutiny from the SEC.
Read more: OpenSea Review: Everything You Need To Know
BeInCrypto reported that the SEC recently issued a Wells Notice to OpenSea, the leading NFT marketplace. This notice suggests that the regulator believes OpenSea may have violated federal securities laws.
“We’re shocked the SEC would make such a sweeping move against creators and artists. But we’re ready to stand up and fight…Every creator, big or small, should be able to innovate without fear,” co-founder and CEO of OpenSea, Devin Finzer expressed.
Regulator Could Force NFT Market Out of the US
According to The Digital Chamber, the SEC’s regulatory overreach could push the NFT sector out of the US. A similar situation occurred during the crackdown on crypto, which led service providers to seek more favorable regulatory environments abroad.
The Wells Notice issued to OpenSea, signaling increased regulatory focus on NFTs, prompted structural changes at Magic Eden. The marketplace separated its domains between the US and global markets, frustrating US users, some of whom called for withdrawals of their holdings.
Notably, both OpenSea and Magic Eden are leading the NFT marketplace rankings, consistently ranking among the top three based on trader count metrics.
Read more: 10 Best NFT Marketing Agencies To Promote Your Digital Art
A recent report revealed that 96% of NFT projects are considered dead, with issues like rug pulls and wash trading among the key challenges. Unfair regulatory pressure could further exacerbate these problems, potentially worsening the trend.
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