OpenSea Seeks SEC Clarity on NFT Marketplace Regulations

OpenSea, a prominent non-fungible token (NFT) marketplace, has formally requested the United States Securities and Exchange Commission (SEC) to clarify that NFT marketplaces do not qualify as exchanges or brokers under federal securities laws. In a letter addressed to SEC Commissioner Hester Peirce, OpenSea argued that NFT platforms do not fit the legal definitions of exchanges or brokers because they do not handle transactions, act as intermediaries, or bring together multiple sellers of the same asset. The inherent uniqueness of most NFTs, which typically have only one seller, disqualifies them from the regulatory framework designed for fungible securities with multiple sellers.

OpenSea emphasized that all transactions involving NFTs occur directly on the blockchain via smart contracts, independent of the OpenSea platform. Users maintain custody of their own assets and initiate transactions through their personal wallets, with OpenSea functioning more as an interface that allows people to discover NFTs and connect with buyers and sellers. Given this decentralized structure, OpenSea asserted that traditional regulatory requirements, such as capital maintenance, recordkeeping obligations, and standards of professional conduct, are unnecessary and misaligned with the operational model of NFT marketplaces.

OpenSea also maintained that it should not be classified as a broker under the Exchange Act, reiterating that it does not provide investment advice, negotiate or execute transactions, custody user assets, or facilitate financing or documentation typically associated with broker activities. The letter cited the SEC v. Coinbase decision, where the court found that merely providing wallet software and access to pricing data did not establish broker status. OpenSea argued that its operations are similarly limited, noting that displaying listings or highlighting trending NFTs is not equivalent to offering investment advice or acting as an intermediary.

To address ongoing uncertainty, OpenSea urged the SEC to issue informal guidance, making it clear that NFT marketplaces are not subject to exchange or broker regulations. It recommended an interpretive release or a staff bulletin to clarify how Rule 3b-16, which outlines the criteria for what constitutes a securities exchange under federal law, applies to NFT marketplaces. This clarification, OpenSea argued, would offer immediate benefits to NFT collectors, buyers, and sellers, as well as the broader NFT ecosystem, by removing regulatory uncertainty.

The ambiguity around the security status of NFTs came into sharper focus last year when OpenSea received a Wells notice from the SEC, warning of potential enforcement action. However, in February 2025, the agency formally closed the investigation without filing charges after the President directed the SEC to ease crypto enforcement and prioritize regulatory clarity. OpenSea's proactive stance aims to foster innovation and protect consumers within the NFT ecosystem, encouraging the SEC to develop regulatory solutions tailored to the specific risks and characteristics of NFT marketplaces.