The U.S. Securities and Exchange Commission (SEC) is reportedly launching an investigation into a nascent sector of the digital assets industry over crypto asset offerings that potentially violate the law.
According to a new report by Bloomberg, anonymous sources familiar with the matter say that the SEC’s probe will focus on whether or not non-fungible tokens (NFTs) are being used to raise money the same way as traditional securities.
The agency’s goal is to determine whether or not NFTs count as securities and thus would be subject to the same federal laws as stocks and other traditional commodities.
The SEC’s inquest will take a close look at fractional NFTs, or NFTs that have been divided up into smaller units that can be traded, to see if they violate any of the regulatory body’s rules, according to Bloomberg.
This isn’t the first time the SEC has been on the hunt for illicit activities in the crypto world. In 2020, the regulator sued San Francisco-based payments company Ripple Labs in a high-profile case for allegedly selling crypto asset XRP as an unregistered security.
Last year, pressure and legal threats from the SEC caused top US crypto exchange platform Coinbase to cancel its plans of offering a high-yield stablecoin savings product.
Furthermore, the regulatory agency also reportedly reached an agreement with popular crypto lending company BlockFi last month. The crypto finance company paid the SEC $100 million to resolve accusations that they were illicitly offering products that act as securities and thus would be subject to regulations.
No official announcement has been made by the SEC yet on the NFT market inquiry.
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