Brian L. Frye, a legal professor and conceptual artist, has sued the U.S. Securities and Exchange Commission (SEC) in an LA court for making NFTs securities under its regulation.
This lawsuit by Fry and Songadaymann is coming at a time when there is a debate on how to categorize digital art assets.
US SEC Sued Over NFT Art Regulation
According to the recent filing, the core of Fry’s lawsuit revolves around his view that the SEC’s interpretation of securities laws are too broad and do not promote artists who use NFT as their medium. Frye, Dogecoin’s Professor of Law, has been always questioning what he considers traditional interpretations of legal works especially such as his ‘SEC No-Action Letter Request’-a conceptual artwork.
In this project, according to him it was an unregistered security based on this kind of Howey Test which neither he received any response from the SEC regarding whether or not it is an unregistered security.
Frye’s latest litigation explores how securities legislation impacts digital and conventional art markets. He argues that by taking its position, SEC restricts creativity among artists by imposing unnecessary barriers to entry into NFT space.
The attorney for Frye, Jason Gottlieb pointed out that this case would safeguard digital artist rights as well as put SEC within its regulatory limitations..
Role of NFTs in Art and Regulation
Frye’s lawsuit also underscores the broader implications of NFT regulation in the art market. NFTs, or non-fungible tokens, have surged in popularity among artists selling digital art, often fetching high prices at auctions.
However, the legal framework for NFTs is still unclear, as the US SEC has suggested that some NFTs could be considered securities, thereby requiring compliance with various rules and precautions. According to Frye’s complaint, art and, specifically, digital art sold as NFTs should not be treated as securities.
This approach opposes the SEC’s use of the Howey Test, a legal criterion developed in the 1940s to assess whether a…
