OpenSea Formally Asks SEC To Clarify Rules For NFT Platforms

OpenSea has formally urged the U.S. Securities and Exchange Commission (SEC) to clarify that NFT marketplaces are not subject to federal securities laws. In a letter sent April 9 to Commissioner Hester Peirce, who leads the agency’s Crypto Task Force, OpenSea’s legal team called on the SEC to draw a clear line between securities exchanges and platforms for non-fungible tokens.

OpenSea general counsel Adele Faure and deputy general counsel Laura Brookover argued that platforms like theirs do not operate as exchanges or brokers under U.S. law. They emphasized that NFT marketplaces don’t match the legal definition of an exchange, since they don’t execute trades, act as intermediaries, or match multiple sellers for a single asset.

“The Commission’s past enforcement agenda has created uncertainty. We therefore urge the Commission to remove this uncertainty and protect the ability of US technology companies to lead in this space,” the letter stated.

Faure and Brookover also asked that the SEC provide guidance tailored to NFT marketplaces, similar to recent staff statements on other crypto-related assets. On April 4, the SEC released a notice saying certain stablecoins could qualify as “non-securities,” exempting them from transaction reporting rules. A February 27 statement from the SEC’s division of corporation finance also said memecoins are more like collectibles and do not fall under securities regulation.

In their letter, OpenSea’s legal team also addressed broker registration concerns. They argued that NFT marketplaces should not be required to register as brokers, as they don’t provide investment advice, handle transactions, or custody user assets.

“We ask the SEC to clear the existing industry confusion on this issue by publishing informal guidance. In the longer term, we invite the Commission to exempt NFT marketplaces like OpenSea from proposed broker regulation,” Faure and Brookover added.

In August last year, OpenSea received a Wells notice from the SEC over potential securities law violations related to NFTs. By February, the SEC dropped the case.