OpenSea Pushes Back against SEC Regulation of NFT Marketplaces
OpenSea, the biggest marketplace for non-fungible tokens (NFTs), urged the U.S. Securities and Exchange Commission (SEC) to exclude NFT marketplaces from its grasp. Through a letter on April 9 to Commissioner Hester Peirce, the lawyers of OpenSea urged the SEC to formally state that websites like OpenSea would not be treated as exchanges or brokers under federal securities law.
Legal Argument: NFT Marketplaces Don’t Fit the Mold
OpenSea’s deputy general counsel Laura Brookover and general counsel Adele Faure argued that NFT marketplaces do not fit within the legal definition of exchanges or brokers. Unlike traditional financial platforms, OpenSea does not execute transactions, hold customer assets, or facilitate trading in the same securities among various buyers and sellers.
“We request the Commission to remove this uncertainty and maintain the ability of U.S. tech companies to lead in this field,” the letter stated, highlighting the need for legal certainty not to foreclose innovation.
Request for Informal Guidance and Broader Exemption
Faure and Brookover sought informal advice from the SEC’s Crypto Task Force, similar to recent comments excluding stablecoins and memecoins from securities classifications. They petitioned that NFTs—like those OpenSea sells—be treated as collectibles, not financial instruments.
They also sought exemption from proposed broker registration rules, stating that OpenSea does not provide investment advice or custody user funds.
Regulatory Shift Underway
The SEC has shown a retreat from its previous hardline stance towards crypto regulation, particularly under the Trump administration. Several enforcement actions have been retracted, such as one against OpenSea itself. This has made the environment more friendly to crypto firms, though regulatory ambiguity remains a concern.
Industry Implications
OpenSea warned that unresolved regulatory questions could threaten the formation of U.S.-based digital asset companies. The company’s plea for transparency is part of a broader industry push to keep NFTs beyond the reach of traditional financial regulations.
