tl;dr
Two U.S. congressmen are advocating for legal protections for NFTs as part of a comprehensive bill to establish a regulatory framework for digital assets. The bill, known as the New Frontiers in Technology (NFT) Act, aims to define clear rules for the regulation of digital assets, including NFTs, an...
Two U.S. congressmen are advocating for legal protections for NFTs as part of a comprehensive bill to establish a regulatory framework for digital assets. The bill, known as the New Frontiers in Technology (NFT) Act, aims to define clear rules for the regulation of digital assets, including NFTs, and delineate the responsibilities of regulatory bodies.
The proposed legislation would designate certain NFTs as non-securities, covering areas such as art, video game assets, and memberships. It addresses concerns about the regulatory status of NFTs and aims to prevent unwarranted enforcement actions against NFT projects. The bill has garnered support from industry advocates and lawmakers who see it as crucial for providing regulatory clarity for both consumers and creators in the evolving landscape of digital assets.
Rep. William Timmons (R-SC) and Rep. Ritchie Torres (D-NY) are pushing to include legal protections for NFTs in a wide-ranging bill that would create a more sensible regulatory framework for digital assets. The NFT Act would establish clear rules for the regulation of digital assets by delineating the responsibilities of the Commodity Futures Trading Commission and the Securities and Exchange Commission, among other things.
The proposed law would, for the first time, establish clear rules for the regulation of digital assets by delineating the responsibilities of the Commodity Futures Trading Commission and the Securities and Exchange Commission, among other things. Introduced by Timmons and Torres in December, the NFT Act would designate some NFTs as non-securities, covering works of art, video game assets, and memberships, among other consumer areas outlined in the bill’s text.
As cryptographically unique tokens linked to digital (and sometimes physical) content, NFTs boomed on Ethereum in 2021 and 2022. Projects like the Bored Ape Yacht Club and CryptoPunks caught mainstream attention along with listings at esteemed auction houses. Food and beverage giants like McDonald's and Starbucks have experimented with NFTs as a way to reward consumers, while entertainment brands like Disney and DraftKings have leveraged the technology for digital collectibles and gaming experiences.
Under SEC Chair Gary Gensler, however, NFTs largely existed in a legal gray area. The former official, who resigned last month, helped lead several enforcement actions against startups issuing NFTs during his tenure. The NFT market has shifted, as token rewards for NFT holders help drive sales, while Republican SEC commissioners criticize enforcement actions against NFT projects under the previous chair's authority.
The NFT Act, proposed by The Digital Chamber, excludes NFTs marketed primarily as investment contracts, and aims to provide regulatory clarity for consumers and creators in the NFT space. The bill would instruct the U.S. Comptroller General to study whether NFTs could be used in business settings as representations of documents, identification, or even government records.
Even though NFTs might not be the buzziest thing in crypto today, the legislation is much needed. Proponents see the NFT Act as a crucial step toward regulatory clarity for both consumers and creators, ensuring that NFT projects aren’t unfairly targeted by regulators in the future.