SEC Commissioner Hester Peirce: NFT royalties do not constitute a security component.

SEC Commissioner Hester Peirce clarified that NFT royalties are not securities, alleviating some doubts, but NFT trading platform regulation remains challenging, and the market urgently needs clearer guidance from the SEC. (Synopsis: Nike's NFT tide brand "RTFKT" was out of service, why did it give up when the market is rejuvenating?) (Background supplement: App Store policy update after Apple lost the lawsuit: Web3 and NFT applications are exempted from "30% Apple tax", the meta-universe has a play? Non-fungible token (NFT) regulation has been a focus of market attention, particularly regarding its legal nature and the applicability of securities regulations. Hester Peirce, a member of the U.S. Securities and Exchange Commission (SEC), known as the "crypto mother", recently publicly stated that it has brought important clarification to whether the royalty mechanism of NFTs constitutes securities. The Defense of the Securities Properties of NFT Royalties: Member Peirce's Insights Commissioner Hester Peirce made it clear in a speech that many NFTs, including those with royalty payment mechanisms, are likely to fall outside the scope of federal securities laws. She likened the royalty mechanism of NFTs to streaming platforms paying royalties to musicians or filmmakers, arguing that this arrangement allows artists to profit from secondary sales of their work, similar to how creators get paid for broadcasting. Peirce emphasized: "This feature does not confer on NFT holders any corporate rights or interests that are traditionally associated with securities." Although member Peirce's statement provided a degree of clarity, the legal profession has a deeper interpretation of it Legal advice from the crypto industry Oscar Franklin Tan, a core contributor to Enjin and chief legal officer of Atlas Development Services, said in the report that Peirce's views are legally sound, but his statement was misinterpreted by some media. Tan said publicly: "Peire's statement is widely misunderstood and royalties have never been considered a security." Tan explained that the core of U.S. securities law is to regulate investment behavior, not for creators to be paid for the fruits of their labor. The artist or creator is not a passive third-party investor, and the royalties received by the artist or creator should be considered commercial income, not investment income under SEC regulation. Citing traditional paper contracts as an example, he asked whether such royalty arrangements would raise regulatory concerns without blockchain technology, calling for careful assessment before regulatory intervention. However, Tan also cautioned that the situation becomes more complicated when the distribution of royalty profits for NFTs extends to multiple holders other than the original creator. OpenSea regulation remains vague Although the legal nature of NFT royalties themselves became clearer after Commissioner Peirce's speech, the biggest beneficiary is probably NFT issuers, but regulatory challenges around "NFT trading platforms" remain, dating back to August 2024, the main NFT trading platform OpenSea received a Wells Notice from the SEC, suggesting that certain NFTs traded on its platform may constitute unregistered securities. Although OpenSea's CEO Devin Finzer announced on February 22, 2025 that the SEC has officially closed its investigation of the platform and called it a big victory for the industry, this does not mean that the regulatory issues of NFT trading platforms have been settled. After the investigation, OpenSea's legal representatives sent a letter to Peirce on April 9, arguing that NFT trading platforms should not be defined as "brokers" under U.S. securities regulations on the grounds that they do not actually execute transactions or act as intermediaries. The letter also urges the SEC to make it clear that NFT trading platforms like OpenSea are not "exchanges" as defined by federal securities regulations. OpenSea's experience highlights the legal uncertainty faced by NFT trading platforms in the absence of a clear regulatory framework. While the administration under current President Donald Trump may have different perspectives or policy priorities on the regulation of crypto assets, current internal discussions within the SEC remain largely focused on how the existing legal framework applies to emerging digital assets. The future regulatory direction of the NFT ecosystem, and how authorities balance innovation and investor protection, will continue to be a key issue that blockchain and financial market participants must continue to pay close attention to. Related stories How do micro-strategies succeed? Bloomberg: Bitcoin's holdings surpass IBM, Nike and other asset reserves, and the stock price is 20 times in five years Nike Metaverse". SWOOSH Launches "Our Force 1" Sneaker NFTs! Hold the CloneX priority registration domain RTFKT: "Nike Air Force 1 Physical Shoes" 4/24 Open Redemption! CloneX falls below 4ETH (SEC Commissioner Hester Peirce: NFT royalties do not constitute securities) This article was first published in BlockTempo's "Dynamic Trends - The Most Influential Blockchain News Media".