The SEC is cracking down on NFTs:
Last week, OpenSea received a Wells notice from the SEC threatening to sue them.
They believe NFTs on OpenSea are securities.
And OpenSea is one of the biggest NFT trading platforms for NFTs.
Wow.
This is a big blow for the whole NFT space, which has been in a regulatory limbo over the past years.
And a big blow for OpenSea:
OpenSea’s trading volumes imploded from $5B/month in January 2022 to 43M/month last July.
That’s a decrease of over 99% 🤯
Implications are huge: ⚡️
1. Brands
Brands already retreating from NFTs. More will follow, due to regulatory risk.
Many already turned their collectibles into better “gift cards” through lengthy terms and conditions.
2. Creators
Cost and complexity of creating and selling NFTs would increase massively.
The creator community would likely die out.
3. Trading platforms
Trading platforms would need to comply with securities regulations.
This means: stricter KYC (Know Your Customer) and AML (Anti-Money Laundering) checks.
The end of wash trading? Maybe.
So what?
NFTs as we’ve known them would become practically unusable for the mainstream consumer.
This is another big blow for the NFT space.
Over the last year, NFTs imploded massively.
Prices of most bluechip collection dropped 50%+ in 2024. More pressure will follow with this.
Trading volume shrank from $18B in 2023 to to $4B YTD.
And about 90% of the 180+ consumer brands with NFT projects stopped them due to lack of engagement and revenue.
Maja Vujinovic, MD of OGroupLLC, investor & builder:
“99% of NFTs were worthless from the beginning.
For OpenSea, this was big business, robbing people with large fees and never worrying about utility.
Reminder: a16z crypto led the series A for $23M and series B for $100M – did they make the money?”
Is this justified?
Why isn’t a piece of art a security?
Let the debate begin.
submitted by /u/levijohnson1
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