Lawyer explains when the SEC will classify NFTs as securities

SEC may classify NFT tokens as securities if investors profit, says Tatiana-Eliza Vasilyeva.

The U.S. Securities and Exchange Commission (SEC) has not yet issued a clear document regulating NFT-related matters. However, it is likely to classify such tokens as securities if investors stand to profit, said Tatiana-Eliza Vasilyeva, managing partner at Baseley & Partners, during an online ForkLog “NFT craze: tokenisation of art”.

According to her, many lawyers tend to believe that profits from monetising a portfolio of intellectual property fall under the Howey test. The SEC uses it to assess whether an asset qualifies as a security.

The lawyer noted that the token is unlikely to fall under the definition of securities if buyers receive non-commercial rights. As an example, Vasilyeva cited the possibility of using NFTs in the film industry:

“If, however, we give the audience the right to participate in the distribution of royalties, the SEC and European regulators would most likely consider this a security token.”

As SEC Commissioner Hester Peirce has said, NFTs and their index baskets can be construed as investment contracts under U.S. securities laws.

Previously, ForkLog explained how NFT transactions are taxed in the United States, Russia, and Ukraine.

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