After more than three years of scrutiny, the United States Securities and Exchange Commission (SEC) has officially closed its investigation into Yuga Labs without taking action. This marks a significant victory not only for the company but also for the broader NFT space. The decision reinforces the stance that NFTs are not securities, relieving those building in the space.
The SEC’s investigation into Yuga Labs, the company behind Bored Ape Yacht Club (BAYC) and other popular NFT collections, began in 2022 under the investigation of former Chairman Gary Gensler, who was also tracking down several NFT platforms and marketplaces.
At the time, the financial agency argued that Yuga Labs offered NFTs, which were termed securities. Classifying these non-fungible assets as securities implies that any platform offering NFTs must register them with the SEC before enabling access to the public. Despite the regulator’s claim, Yuga Labs maintained that its digital assets were collectibles, not securities.
In its latest disclosure of its freedom from the SEC’s clutches, Yuga Labs stressed that “NFTs are not securities.”
Yuga Labs is not the only NFT platform under the SEC’s scrutiny during Gensler’s administration. In late 2024, popular NFT marketplace OpenSea came under the regulatory agency’s scrutiny as it received a Wells notice from the SEC. This signaled that the financial watchdog was considering legal action against the NFT platform. Other projects the SEC probed included CyberKongz and Flyfish.
Since Donald Trump emerged as the U.S. president, various government agencies, including the SEC, have explored a crypto-friendly path. Last month, the SEC ended its investigation into OpenSea. Other crypto-focused platforms like Coinbase, Binance, Gemini, Robinhood, and Uniswap were recently freed from the SEC’s clutches. Yuga Labs is the latest to join the bandwagon.
The SEC’s new-found friendly approach toward NFTs has set a precedent for more projects to join the NFT ecosystem. Time will tell if the financial regulator will dispense more precise regulations to govern how NFTs are launched and traded.
