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Are NFTs securities? – CoinYuppie: Bitcoin, Ethereum, Metaverse, NFT, DAO, DeFi, Dogecoin, Crypto News

In recent years, the emergence of the Internet has brought new regulatory challenges to securities regulators around the world, especially the emergence of cryptocurrencies. Regulators represented by the SEC in the United States have tried to bring tokens with securities attributes into the jurisdiction of securities laws. scope. So, will NFTs be recognized as securities, and when might they be recognized as securities?

To help clarify whether a digital asset is a security, in 2018 the SEC issued guidance in its Digital Asset “Investment Contract” Analysis Framework (Framework) to aid in the analysis. The framework reiterates for the first time that the investment contract analysis of the Howe test remains the primary tool for determining whether an issuance transaction of a digital asset is a security.

The first point of the Coway test analysis is the need for capital investment. NFTs are primarily offered on the Ethereum blockchain and paid in the Ethereum cryptocurrency. In the Howe test analysis, whether it is in the form of real (or legal) currency, digital assets or other types of consideration, it can be recognized as a capital investment, so as long as NFTs are obtained by exchanging value, this rule is satisfied. .

For the second point, NFTs are different from cryptocurrencies, and as non-fungible tokens, the relationship between buyers and sellers may be different from a typical investment contract. In this regard, some scholars believe that although NFT is digital, it represents real-world objects, “the most common is a piece of art, music or video.” Although the commonality analysis is a very specific fact, the US securities It is unlikely that the Exchange Commission will see the trading of most non-fungible tokens as a common cause. If a purchased NFT is a collectible, then there is no further connection between the buyer and seller in that transaction. Despite being sold through the blockchain, these types of non-fungible tokens are basically unique goods in the marketplace, not unlike selling a…

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