SEC’s Peirce States Many NFTs Don’t Qualify as Securities, Including Creator-Compensating Tokens

Commissioner Hester Peirce, head of the newly established SEC Crypto Task Force, shared her perspective on the regulatory status of non-fungible tokens (NFTs) at the SEC Speaks event on Monday.

She said that, while many NFTs do not qualify as securities, certain NFTs designed to compensate creators over time could also fall outside the scope of federal securities laws.

The SEC’s Crypto Task Force, led by Peirce since Jan. 2025, was created as part of the agency’s broader effort to establish clearer regulations in the rapidly growing and often confusing cryptocurrency sector.

Under her leadership, the task force has been actively working on providing more defined regulatory guidance. This includes guidance for crypto assets, such as NFTs and stablecoins.

ICYMI: HEAD OF CRYPTO TASK FORCE HESTER PEIRCE SHARES VIEW ON NFTS – "MANY NON-FUNGIBLE TOKENS (“NFTS”) ALSO ARE NOT SECURITIES, INCLUDING NFTS DESIGNED TO COMPENSATE THEIR CREATORS OVER TIME" pic.twitter.com/5ETIaIQRxM

Peirce, known as “Crypto Mom” for her vocal dissents on SEC enforcement actions against crypto firms, further clarified her position. She stated that many NFTs do not offer the economic rights typical of securities. These include those designed to compensate creators with royalties over time.

These NFTs are powered by smart contracts. They allow artists to earn a portion of the resale price every time the NFT is sold. This works similarly to how streaming platforms pay royalties to creators. Peirce argued that these “creator royalties” do not involve ownership rights in a business. Additionally, they do not promise profits typically associated with securities.

While Peirce has classified many NFTs as non-securities, the SEC itself has not yet provided its own official clarification on the matter, leaving ambiguity in how these digital assets should be regulated.

This distinction shows her position as an advocate for clearer and more specific guidance from the agency.

Since her appointment to lead the SEC’s Crypto Task Force, Peirce has made significant progress in engaging with the industry. The task force has hosted multiple roundtables and received numerous public submissions. Additionally, it has worked closely with lawmakers to develop potential legislation for crypto’s complex regulatory landscape.

Her leadership marks a shift from the approach of former chairman Gary Gensler, who was known for his skepticism of crypto.

Peirce’s comments on NFTs focus on those that do not involve security-like rights. However, she also acknowledged the challenges posed by other digital assets. These assets might blur the lines between securities and non-securities, she noted.

Further, she pointed to the importance of understanding the “economic realities” of these assets, rather than simply their form, to determine their regulatory classification.

Looking ahead, Peirce stressed the need for clearer rules to facilitate the growth of the crypto market while ensuring investor protection.

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