Should NFTs be defined as consumer goods?

The Chamber of Digital Commerce (TDC) has called on Congress to pass legislation that would define certain non-fungible tokens (NFTs) as consumer goods, exempting them from federal securities laws.

This follows growing concerns over recent SEC enforcement actions, including the issuance of a Wells Notice to NFT marketplace Open Sea.

In a statement released on September 10, the Chamber of Digital Commerce argued that NFTs created for consumable use, such as digital artwork, collectibles, and video game assets, should not be classified as financial products.

Instead, the Chamber of Digital Commerce argues that these tokens should be treated as traditional consumer goods.

The organization stressed that NFTs are typically purchased for personal use rather than investment purposes, and that occasional resale for profit does not transform them into securities.

The statement said: "TDC's 2023 Pixels to Policy report found that many NFT applications are clearly not designed as investment contracts or speculative financial instruments."

The Chamber of Digital Commerce also emphasized that, like traditional collectibles or artworks, the secondary market characteristics of NFTs do not inherently make them financial products.

The Chamber of Digital Commerce's call comes as the SEC has taken a series of actions against NFT platforms.

Recent lawsuits against companies like Draft Kings and Dapper Labs have raised alarms in the digital asset industry, raising concerns that excessive regulation could stifle innovation.

The SEC’s recent enforcement action against Open Sea, one of the largest NFT marketplaces, has further heightened those concerns.

“SEC Chairman Gary Gensler’s coercive regulatory approach is ill-advised and has endangered countless people who rely on NFTs for their livelihoods,” the Chamber of Digital Commerce said.

The Chamber of Digital Commerce warns that the current lack of clear legislation is pushing NFT creators and companies overseas, where regulation may be more favorable.

The Chamber of Digital Commerce is currently urging the U.S. Congress to clarify that consumable NFTs should not fall under the SEC’s jurisdiction.

At the same time, the organization has also issued a warning that continued uncertainty could harm the industry and the broader U.S. economy.