OpenSea, the largest NFT marketplace in the world, has been asking for guidance from the Securities and Exchange Commission (SEC). Specifically, they have formally asked for guidance on how NFT platforms should be regulated. The US-based technology company has joined calls to exempt NFT marketplaces such as itself from new broker regulations proposed last year.
In a recent statement, OpenSea's general counsel, Adele Faure, and deputy general counsel, Laura Brookover, articulated the company's position. Our central arguments focus on the distinct operational model of NFT marketplaces and their departure from conventional financial intermediaries.
OpenSea highlights that it’s not an investment advisor, doesn’t consummate trades, nor hold customer assets in custody. The platform has publicly asserted that it is not an exchange under US securities laws. It further claims that it doesn’t serve as an agent, broker, or auctioneer by bringing together multiple sellers for the same asset.
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
The request comes as the SEC has been intensifying its scrutiny of the crypto industry. This heightened scrutiny has led to a more intense examination of NFT projects. OpenSea has found itself in the news lately for purportedly violating securities laws. Still, the SEC has already dropped a number of enforcement actions targeting crypto firms, including one against OpenSea.
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 firm suspended its airdrop incentive program after receiving severe criticism from its user base. This nagging incident has underscored how responsive PHMDC is to community concerns.
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
