SEC Commissioners Pierce and Uyeda Challenge the SEC's Approach to NFTs and Stoner Cats


September 14, 2023


Iara Kaiser

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In a stunning turn of events, two commissioners from the SEC, Hester Pierce and Roisman Uyeda have publicly expressed their disagreement with the recent enforcement actions taken by the SEC against Stoner Cats 2 LLC (SC2) and the application of securities laws to non fungible tokens (NFTs).

They issued a joint statement expressing their concerns about the absence of clear guidelines for artists and creators who are exploring the NFT space to support their creative endeavors and engage with their fan communities. The dissenting commissioners argue that imposing securities laws on NFTs without establishing defined limitations could potentially hinder creativity and innovation.

The commissioners stated that artists and creators, whether selling physical prints or NFTs, deserve clear guidance on whether and how securities laws apply to their activities & firmly stated that NFTs, despite involving monetary transactions, should not automatically be categorized as securities.

They drew parallels between NFTs and traditional collectibles, such as the Star Wars memorabilia sold in the 1970s & highlighted that their ''Early Bird Certificate Packages'' were instrumental in building a passionate community of Star Wars enthusiasts.Applying the SEC's current analysis, these certificates could have been deemed investment contracts, potentially subjecting them to securities regulations.

As this internal division within the SEC unfolds, it raises fundamental questions about how the government should balance investor protection with fostering creativity and innovation in emerging fields like NFTs, leaving both artists and legal experts closely watching the developments.