SEC Commissioner Peirce: NFTs with creator royalty mechanisms are not considered securities.

According to a report by Cointelegraph on May 21, Hester Peirce, a commissioner of the U.S. Securities and Exchange Commission (SEC), stated that most non-fungible tokens (NFTs), including those with creator royalty mechanisms, are likely not subject to federal securities laws.

Peirce pointed out that NFTs that allow artists to receive resale profits will not automatically be classified as securities. She likened this model to the compensation mechanisms that streaming platforms offer to musicians and filmmakers. Oscar Franklin Tan, Chief Legal Officer of Atlas Development Services, a core contributor to Enjin, stated that U.S. securities law primarily focuses on investment regulation rather than creator compensation; the royalties earned by creators are similar to business income rather than investment income, and the SEC has never prohibited artists from receiving royalties for secondary sales of their works through blockchain protocols.