SEC Commissioner Hester Peirce stated that many NFTs, even those providing creator royalties, likely do not fall under federal securities laws. In her speech, Peirce clarified that NFTs allowing artists to earn revenue from resales are not automatically considered securities. She compared this model to streaming platforms that pay royalties to creators, emphasizing that these payments do not imply ownership stakes or profits typically associated with securities. Oscar Franklin Tan, chief legal officer of Enjin, noted that Peirce’s statements have been misreported, asserting that such NFTs have never been classified as securities. He explained that the income artists earn from royalties should be seen as business income rather than investment income. Tan highlighted the complexities arising when NFTs promise shared profits among multiple holders but reiterated that the SEC never prohibited royalty agreements in primary or secondary sales. Meanwhile, NFT marketplaces like OpenSea have engaged with the SEC, suggesting a need for clearer regulations that differentiate them from traditional financial intermediaries.

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