Why NFTs Don't Qualify as Securities, According to SEC Chairman
Chairman Paul Atkins clarifies that nonfungible tokens should be viewed as collectibles rather than investment contracts, while the commission defines new digital asset categories exempt from securities regulation.
Following the US Securities and Exchange Commission's (SEC) establishment of four comprehensive categories of digital assets excluded from securities regulations, Chairman Paul Atkins has provided additional insight into why nonfungible tokens (NFTs) typically don't qualify under that classification.
During a Wednesday appearance on CNBC, Atkins reinforced that the commission's latest interpretive release established four distinct categories of digital assets generally not regarded as securities: digital commodities, digital tools, digital collectibles including NFTs, and stablecoins.
Throughout the discussion, interviewer Andrew Ross Sorkin challenged Atkins regarding digital collectibles, pointing out that their structure could potentially make them resemble securities more closely.
"Well, that's true with anything," Atkins responded, stressing that the SEC's evaluation continues to depend on the specific facts and circumstances surrounding each asset, especially whether it constitutes an investment contract according to established legal precedent.
According to Atkins, digital collectibles are typically categorized as items purchased and retained, comparable to tangible collectibles, as opposed to investment contracts — which serve as the characteristic element of securities.
"Some of these collectibles, like a baseball card, a meme or one of those memecoins, NFTs — those are something that somebody buys. It's an immutable purchase… it's not something like another asset where people are trading it."
SEC continues to move away from enforcement-led crypto policy
The regulatory body has restructured its methodology toward digital assets under Atkins' leadership, a transformation that has aligned with the establishment of a more crypto-supportive Trump administration at the beginning of 2025.
"We're breaking with the past," Atkins stated throughout the CNBC appearance, outlining the SEC's effort to deliver more transparent guidance and establish a more stable regulatory environment for the digital asset industry.
In the previous year, Atkins denounced the agency's earlier dependence on "regulation through enforcement" and committed to abandoning that strategy. He additionally highlighted tokenization as a critical innovation that regulatory bodies should encourage rather than limit.
He has repeatedly emphasized that previous regulatory errors have caused the United States to fall behind in crypto innovation by up to a decade, and has committed to reversing that trajectory.