Now OpenSea continues to make waves by siding with crypto against the United States Securities and Exchange Commission (SEC). The company further contends that it doesn’t meet the federal securities laws’ definition of a broker or exchange. The company recently was on the receiving end of a Wells notice from the SEC, an indication of likely forthcoming enforcement action.

OpenSea argues that its platform is not a broker according to the Exchange Act’s definition. The swap dealer claims it does not provide advice on investments, execute transactions on behalf of customers, custody customer assets, or arrange financing.

OpenSea states that NFT platforms do not qualify under the legal definitions of exchange or broker. They invoke SEC v. Coinbase as a significant legal precedent to reinforce their position. The company conceptualized NFTs as non-fungible digital items, which often have a single entity or individual as the owner.

OpenSea makes a related argument that NFTs, by nature of their non-fungibility, cannot meet the regulatory framework for a fungible security. As the company states, it operates less as a traditional financial intermediary and more like an interface.

"allows people to discover NFTs and connect with buyers and sellers" - OpenSea

OpenSea states that its operations are limited. Showing collectibles for sale, or promoting the NFTs that are gaining the most popularity, isn’t the same as providing investment recommendations or serving as broker-dealer.

To provide clarity to the market, OpenSea recommended the SEC issue an interpretive release or a staff bulletin to clarify how Rule 3b-16 applies to NFT marketplaces. The company lobbied the SEC to offer this informal guidance. They seek to signal their intent that NFT marketplaces not be regulated as exchanges or brokers.

"We propose that the SEC clearly state that NFT marketplaces like OpenSea do not qualify as exchanges under federal securities laws" - OpenSea

OpenSea argues that basic regulatory requirements are burdensome and out of sync with how NFT marketplaces operate.

"This clarification would offer immediate benefits to NFT collectors, buyers, and sellers, as well as the broader NFT ecosystem, by removing regulatory uncertainty" - OpenSea