SEC’s Peirce says NFT royalties do not make tokens securities
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Lawyer Oscar Franklin Tan told Cointelegraph that Hester Peirce's comments were widely misunderstood, saying that royalties were never considered a security.
United States Securities and Exchange Commission (SEC) Commissioner Hester Peirce said many nonfungible tokens (NFTs), including those with mechanisms to pay creator royalties, likely fall outside the purview of federal securities laws.
In a recent speech, Peirce said that NFTs that allow artists to earn resale revenues do not automatically qualify as securities. Unlike stocks, NFTs are programmable assets that distribute proceeds to developers or artists. The SEC official said the model mirrors how streaming platforms compensate musicians and filmmakers.
“Just as streaming platforms pay royalties to the creator of a song or video each time a user plays it, an NFT can enable artists to benefit from the appreciation in the value of their work after its initial sale,” Peirce said.
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