That’s why OpenSea, the largest NFT marketplace, has made a big move. In it, they urged the Securities and Exchange Commission (SEC) to provide clear guidelines for NFT platforms. To that end, the company is urging the SEC to provide informal guidance and exempt NFT marketplaces from the proposed broker regulations.
In a recent communication, OpenSea's General Counsel Adele Faure and Deputy General Counsel Laura Brookover articulated the company's position. As to OpenSea’s legal obligations, they stressed that OpenSea does not satisfy the legal definition of an exchange under US securities laws. OpenSea claims it simply makes transactions possible without actually executing any transaction, or having the functions of an intermediary. Additionally, the platform doesn’t combine different sellers for the same assets.
“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 announcement from Federal Reserve comes as regulators have ratcheted up their scrutiny of the broader NFT market. For what it’s worth, OpenSea itself has been under the microscope for potential breaches of securities law. In addition, the SEC recently dropped enforcement actions against multiple crypto companies, including OpenSea, further demonstrating the shifting regulatory terrain.
OpenSea has been no stranger to rough waters, recently needing to pause its own airdrop reward system after facing backlash from users. Though these challenges exist, the firm insists that having unambiguous rules of the road is key to encouraging innovation.
“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
OpenSea believes that exempting NFT marketplaces from stringent regulations will allow US technology companies to maintain a competitive edge in the rapidly developing digital asset space. This would go a long way toward providing much-needed regulatory clarity and certainty that would foster innovation and growth within the NFT sector.
“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
