ANALYSIS: Do NFTs Ape Securities—or Preview Easier Disclosures?

Are NFTs (non-fungible tokens like the popular Bored Ape artwork) securities? The Securities and Exchange Commission’s first enforcement decision against an NFT would have you believe they are. But in the analog world, digital assets such as NFTs don’t fit cleanly into existing boxes for what is and what isn’t a security regulated by the SEC.

The August enforcement action hints at when and how the SEC will likely regulate NFTs in the future, and is likely only the opening salvo in a larger enforcement campaign against NFTs. NFT offerings that function as securities for investors will need to be ...