- OpenSea seeks formal guidance from SEC to avoid being misclassified as a securities broker.
- The NFT platform argues it connects users, but doesn’t hold assets or execute trades.
- SEC’s evolving crypto stance may pave the way for clearer rules around NFT marketplaces.
OpenSea, the top NFT marketplace, requested clarification from the U.S. Securities and Exchange Commission (SEC) about why its platform lacks status as a securities exchange or broker under federal securities laws. OpenSea filed this request after regulatory updates, during which the SEC dismissed investigations against multiple crypto firms, including the company itself.
Adele Faure and Laura Brookover, representing OpenSea, submitted a letter to Hester Peirce at the SEC to explain why the marketplace fails to fit the legal definition of an exchange. According to traditional definitions, OpenSea operates as a digital marketplace where users discover each other but do not perform transactions or act as an intermediary. It connects users while buyers and sellers find each other independently through the platform, differing from regulated securities exchanges.
The Legal Position of OpenSea
Faure and Brookover emphasized that OpenSea does not handle or hold customer assets, nor does it provide investment advice, negotiate deals, or facilitate the execution of transactions on behalf of users. Legal team members point out that platform involvement without intermediary presence indicates the platform should not be placed under broker status. OpenSea and other NFT marketplaces should be excluded from broker regulations because they avoid the usual risks commonly found in securities markets, such as conflicts of interest or financial instability.
Representatives from OpenSea argue that non-fungible token assets (NFTs) do not align with existing securities trading protocols because of their distinct non-fungible nature. The company proposes that the SEC provide informal guidance to establish clear limits for NFT marketplace regulations, which will benefit market participants and customers.
Related: SEC’s April 11 Roundtable to Shape Crypto Trading Regulations
The SEC’s Evolving Approach to Crypto Regulations
The SEC’s attitude towards cryptocurrencies and related platforms has changed under the Trump administration. This shift includes shelving investigations into several firms, such as OpenSea. Commissioner Peirce leads the SEC’s Crypto Task Force to develop clear regulatory standards. The letter from Faure and Brookover requests that the crypto task force provide specific guidance about marketplaces for non-fungible assets, including NFTs. The SEC made stablecoins and memecoins non-security classifications in early 2024 as part of its growing acceptance of digital assets.
