Digital Chamber Urges Support For NFT Act To Clarify Legal Status

According to Cointelegraph, the blockchain advocacy group Digital Chamber has called on United States-based crypto users to support a bill that aims to designate non-fungible tokens (NFTs) according to their use cases. On September 10, the organization urged the US Congress to classify certain NFTs as consumer products, which would exempt them from federal securities laws. The group argued that many NFTs function similarly to artwork and traditional collectibles and should be treated as consumer goods rather than securities. In response to this call, US Representative William Timmons introduced the New Frontiers in Technology Act (NFT Act), which seeks to address the legal and regulatory treatment of NFTs. According to Digital Chamber, the newly introduced NFT Act protects “covered NFTs,” classifying them as collectibles with the primary purpose of being a work of art, musical composition, literary work, or other intellectual property. This includes collectibles, merchandise, virtual land, or video game assets. The protection also extends to affinities, rewards, loyalties, rights, licenses, or tickets. However, the Act does not protect NFTs marketed as investment products, with actual or implied actions pointing toward a potential increase in value. The Act also encourages education by directing the US Comptroller General to conduct a study on NFTs after the bill is enacted. Digital Chamber urged the community to support the NFT Act, emphasizing that it would help the industry flourish without “misapplied” securities regulations. The organization encouraged Americans to contact their representatives in Congress to voice their support for the bill. “By supporting this Act, you can ensure continued technological innovation, greater consumer protection, and a true home within the United States for blockchain technology,” Digital Chamber wrote. This development comes amid the SEC’s recent actions against the NFT space. On August 28, the government agency sent a Wells notice to NFT marketplace OpenSea, suggesting that the SEC may take future enforcement actions against the trading platform. On September 17, the SEC fined the restaurant Flyfish Club $750,000 for selling NFTs. SEC commissioners Hester Peirce and Mark Uyeda criticized the enforcement action, arguing that the NFTs did not trigger securities laws and were simply a different way to sell memberships.