OpenSea Urges SEC to Clarify NFT Marketplace Rules Under Federal Law

Highlights:

• OpenSea calls on the SEC to clarify NFT marketplace classification under securities law.
• OpenSea states it does not act as a broker or exchange in any legal or functional sense.
• The company seeks informal guidance and exemption from proposed broker regulations.

OpenSea, the largest NFT marketplace, has requested the U.S. Securities and Exchange Commission (SEC) to officially clarify that NFT marketplaces should not be considered securities exchanges or brokers under federal law. In a letter to Commissioner Hester Peirce dated April 9, OpenSea claimed that the absence of regulation impedes the operation of the NFT market and stifles innovation.

The company sought to explain that its operation was not similar to traditional financial platforms. In clarification, OpenSea mentioned that it does not bring together multiple buyers and sellers of the same NFTs or facilitate the sale on behalf of its clients. Each NFT is distinct, which entails that for each transaction, there is generally only one buyer and one seller, unlike the fungible securities, which are traded on centralized exchanges.

BREAKING OPENSEA URGES THE SEC TO EXCLUDE NFT MARKETPLACES FROM REGULATION UNDER FEDERAL SECURITIES LAWS pic.twitter.com/y8ZlKEauFQ

— CryptoSavingExpert ® (@CryptoSavingExp) April 10, 2025

This comes after the SEC in February ceased several crypto-related investigations under the Trump administration, including one involving OpenSea. That shift translated to a paradigm shift from regulation by enforcement to regulation by making things clearer. Under the current establishment, OpenSea pointed out that it does not fall under the Exchange Act’s definition of a broker or an exchange.

Why OpenSea Says It Should Not Be Regulated as a Broker or Exchange

OpenSea also noted that the broker classification was unwarranted. The firm stressed that it does not provide investment advice, trade, negotiate terms, or even possess users’ assets. Rather, buyers and sellers engage in transactions through smart contracts and self-hosted wallets. OpenSea only displays listings and allows users to discover digital collectibles.

Interpreting past legal definitions, the firm said that brokerage was generally defined as the business of carrying out securities transactions for others. Often, they retain the money or participate in the negotiation process of the deal. However, OpenSea said it does none of this. In the same context, the company cited the case that the SEC had against Coinbase, in which the court stated that it did not engage in broker services when offering wallet tools and market data. It further pointed out that OpenSea’s involvement is even less.

"Case dismissed." Two words that every defendant in every case yearns to hear. Today we can announce upon full Commission approval @SECGov is dropping our case. There will be no settlement or compromise– a wrong will simply be made right. 1/4

— paulgrewal.eth (@iampaulgrewal) February 21, 2025

The company also pointed out that many of the issues dealt with by securities regulations. This included mismanagement of corporate funds or fraud not present on the platform. Since users hold full control over their wallets and all transactions happen on the blockchain, OpenSea does not think that brokers’ oversight is necessary.

OpenSea Seeks Long-Term Policy Shift From the SEC

In addition to the informal guidance, OpenSea urged the Commission to extend temporary relief from the proposed broker rules from Section 15(a) of the Exchange Act to NFT platforms. It underlined the necessity of policy that would allow the demonstration of how NFT ecosystems actually work, rather than the policy based on traditional securities systems.

OpenSea believed that such guidance would clear the remaining doubts caused by previous enforcement actions. Consequently, this would make American-based digital platforms competitive. The company also proposed its willingness to work with the SEC to establish a realistic roadmap for the regulation of NFT platforms. Faure and Brookover, OpenSea’s top legal officers, stressed that innovation could move base to other jurisdictions with clear regulations.

Recent actions by the regulatory authorities also seem to back OpenSea on this issue. On April 4, the SEC stated that stablecoins are not securities. Earlier, it also clarified that it considers memecoins as digital collectibles rather than financial instruments. OpenSea emphasized that the SEC should recognize NFTs in a similar way.