- Hester Peirce says most NFTs lack economic rights and aren’t securities.
- NFT royalties are like music streaming payments, not investment returns.
SEC Commissioner Hester Peirce has clarified that most non-fungible tokens (NFTs), including those offering creator royalties, likely fall outside the scope of U.S. securities laws.
Speaking at the “SEC Speaks” event in Washington, Peirce, who leads the SEC’s Crypto Task Force, emphasized that NFTs often lack the characteristics that define securities. Her view marks a departure from the stance of former SEC Chair Gary Gensler, who previously argued that several crypto assets, including XRP, qualified as securities.
Peirce, often referred to as “Crypto Mom,” stated that NFTs not tied to business ownership or profit-sharing do not qualify as securities. She pointed out that many NFTs grant no economic rights to holders and therefore should not fall under the SEC’s jurisdiction.
Do Royalties Make NFTs Investment Assets?
These NFTs, according to Peirce, often include mechanisms that enable creators to earn royalties on secondary sales. However, this feature alone does not imply investment intent. She likened NFT royalties to streaming royalties, where artists earn revenue each time their content is played.
“Just as streaming platforms pay royalties to musicians, NFTs enable artists to benefit from future resale value,” Peirce said.
She added that this programmable royalty function does not give buyers any claim to a business or future profits. Despite differing views, Peirce stressed that the SEC’s Crypto Task Force continues to work toward clear guidance. She believes regulatory clarity will benefit both creators and investors while supporting innovation.
Meanwhile, legal experts echoed her sentiment. Oscar Franklin Tan, legal head at Atlas Development Services, said media reports have mischaracterized Pierce’s statements.
He argued that NFT royalties were never considered securities and called the issue legally non-controversial. Tan added that U.S. securities law regulates investment products, not creator compensation. However, broader questions around NFT marketplaces remain unresolved.
In 2024, OpenSea received a Wells notice from the SEC regarding possible securities violations. Yet in February 2025, the SEC closed its investigation. Following the decision, OpenSea lawyers wrote to Peirce, urging the SEC to clarify that marketplaces like OpenSea do not act as brokers or exchanges under federal law.
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