- Democratic Congressman Wiley Nickel criticized the SEC’s “heavy-handed approach” and “aggressive use of regulation by enforcement” against OpenSea, calling it a “blatant abuse of power.”
- Crypto industry figures like Jake Chervinsky and Cameron Winklevoss joined Nickel in criticizing the SEC, with Winklevoss arguing that the regulator has expanded its “war on crypto.”
- The SEC has notified OpenSea of its intent to bring an enforcement action against the NFT marketplace, scrutinizing whether NFTs should be considered securities.
A chorus of pro-crypto voices took aim at the regulator after it notified NFT marketplace OpenSea of its plans to pursue enforcement action.
Pro-crypto Congressman Criticizes SEC
Democratic Congressman Wiley Nickel (D-NC) took aim at the US Securities and Exchange Commission’s (SEC) “heavy-handed approach to enforcement” after OpenSea said the regulator threatened a lawsuit against the NFT marketplace.
In a tweet, Nickel criticized the SEC’s “aggressive use of regulation by enforcement,” calling it a “blatant abuse of power that erodes trust and transparency in our regulatory system.” He accused the regulator of threatening to derail the progress driving digital innovation in the United States and called on the SEC to work with Congress to create clear, fair regulations governing digital assets and Web3 technologies.
Crypto Industry Joins Criticism
Crypto industry figures joined Nickel in criticizing the SEC, with Variant Fund’s Chief Legal Officer Jake Chervinsky accusing the regulator of having “fully lost the plot.”
Gemini co-founder Cameron Winklevoss, who donated $1 million to the presidential campaign of Republican nominee Donald Trump, argued that “The reset with crypto has turned into an expansion of the war on crypto.”
Winklevoss’ comments appeared to reference efforts from crypto grassroots and lobbying organizations to reset relations with the Democratic Party following the nomination of Kamala Harris as its presidential candidate.
The SEC and OpenSea
NFT marketplace OpenSea revealed Wednesday that it had received a Wells notice from the SEC notifying it of the regulator’s intent to bring an enforcement action against it.
The notice represents an expansion of the regulator’s scrutiny of digital assets, with NFTs representing a different asset class to the cryptocurrencies or fungible tokens that the agency has previously argued constitute securities.
That question may be settled in another case however. The SEC itself faces a lawsuit from law professor Brian Frye and musician Jonathan Mann seeking to force the agency to define what types of NFTs it considers securities.
Conclusion
Pro-crypto lobbying group the Blockchain Association issued a statement accusing the SEC of using the threat of enforcement action to expand its jurisdiction and treat digital art as securities. The idea that a financial markets regulator established in the 1930s would have jurisdiction over digital art in the 2020s defies not only common sense but also the SEC’s statutory authority, wrote Chervinsky.
