The Securities and Exchange Commission (SEC) is reportedly looking into whether Yuga Labs, the developer of the hugely popular Bored Ape Yacht Club (BAYC) and owner of one of the first NFT collections to start selling for six figures, and then seven, CryptoPunks, violated securities laws.
What it means is that the agency, which has said repeatedly that it thinks all regular cryptocurrency tokens other than bitcoin are securities, is looking more aggressively into whether non-fungible tokens are also — in its opinion — securities, a Bloomberg report said.
The agency has been bringing test cases against a variety of token-issuers for years. So far all have been settled for fines of as much as $50 million, but cross-border payments firm Ripple refused to do so, and is in the midst of a trial opposing the regulator.
Read here: Ripple Lawyer Confident SEC Case Will Wrap in April
Ripple — and much of the crypto industry — have accused the SEC of creating regulations by enforcement rather than waiting for Congress to determine what the law is. SEC Chairman Gary Gensler has argued that the existing laws are very clear that most tokens are securities.
And part of the investigation looks at the ApeCoin Yuga released earlier this year, a standard cryptocurrency related to its plans to build a metaverse.
Read more: Gensler Changes Tactics in Capitol Hill Crypto Fight
NFTs are another matter however, and it’s generally been believed that because they are non-fungible — no one is like another — they do not fit the definition of a security. There are some exceptions, for example NFTs that fractionalize ownership of property ranging from a stock share to a piece of real estate would be securities.
The agency began investigations about that type of NFT back in March.
See more: How Did NFTs Become SEC’s Newest Crypto Target?
“It’s well-known that policymakers and regulators have sought to learn more about the novel world of web3,” Yuga Labs told Bloomberg. We hope to partner with the rest of the industry and regulators to define and shape the burgeoning ecosystem,” Yuga said in a statement to Bloomberg News.
Toasting NFTs
If you want to know how far NFTs have penetrated the mainstream consciousness, look no farther than pancake provider IHOP, which trolled crypto users on Twitter with an NFT drop teaser that turned out not to be a digital asset at all.
Despite several very broad hints, like the use of crypto industry lingo “we’re dropping an NFT” and a flying pink kitten reminiscent of the 2017 CryptoKitties game that was the first real breakout NFT, the real focus was a very small plate of French toast that briefly flew across the animated Oct. 6 tweet teasing an Oct. 10 reveal.
Have you guys heard of NFTs? Well before anyone else jumps on the bandwagon, we’re dropping our own! Check out the countdown at https://t.co/z5SMwhoYGG. pic.twitter.com/LXvxFgTzPJ
— IHOP (@IHOP) October 6, 2022
“Have you guys heard of NFTs? Well before anyone else jumps on the bandwagon, we’re dropping our own!” it said.
The reveal, however, was for something decidedly not digital.
“As promised, we just dropped our #NFT: New French Toast! It’s Thick, Fluffy and extremely fungible,” it said, playing off the crypto term NFT — non-fungible token — which means no two are alike.
As promised, we just dropped our #NFT: New French Toast! It’s Thick, Fluffy and extremely fungible. pic.twitter.com/r0sZKeBq0a
— IHOP (@IHOP) October 10, 2022
The marketing gesture was not really that exciting except in one way: A mainstream company thought NFTs were something well known enough to build an ad not tightly targeted at the crypto community but on its @IHOP Twitter account.
Shop-to-Earn
Web3 loyalty platform ShopNEXT has teamed up with Visa to allow any card-holder to earn token rewards by connecting their visa card to the company’s app and shopping, as well as boosting their rewards with in-app gameplay and NFT cards.
See also: Visa, ShopNEXT Team on Web3 Loyalty Platform for Cardholders
The gamification-focused Shop-to-Earn program’s goal “is to help merchants grow their businesses by motivating everyone to shop and earn token rewards” said ShopNEXT CEO Linh Le in a release. “From there, we also provide the easiest and safest gateway for everyone to start their Web3 journey.”