SEC’s Enforcement Action Against NFTs Could Hurt the Industry

• The SEC first enforcement action against NFT offerings last month sets a bad precedent.
• The regulator alleged that the NFTs issued by Impact Theory qualified as unregistered securities.
• Many in crypto quarters said the action foreshadows other future actions against NFT projects.

The U.S. Securities and Exchange Commission (SEC) last month made its first regulatory move against NFT offerings, unsettling the entire crypto market. Many in crypto quarters believe the recent action sets a bad precedent for the SEC to target other projects in a similar fashion.

Regulatory scrutiny of the crypto space increased following several institutional failures and collapses. With the recent SEC action, many believe NFTs could face more regulatory heat. Not only that, there is also the fear of regulators in other jurisdictions following the SEC’s steps against NFTs.

For the longest time, NFTs have remained one of the digital assets to have eluded regulatory scrutiny. As a result, several crypto investors have poured into the NFT market as a haven asset.

In late August, the SEC alleged that entertainment c…

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