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U.S. Court Confirms that NFTs can be Classified as Securities

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On March 7, the U.S. District Court for the Southern District of New York recently confirmed for the first time that under certain circumstances, NFT can be rec

U.S. Court Confirms that NFTs can be Classified as Securities

On March 7, the U.S. District Court for the Southern District of New York recently confirmed for the first time that under certain circumstances, NFT can be recognized as a security under the Securities Act of 1933. Recently, the United States District Court for the Southern District of New York ruled on a class action lawsuit against the basketball theme NFT Moments. According to Howey’s test, the court recognized the NFT as an “investment contract” and rejected the defendant’s motion of rejection. The court pointed out that the plaintiff’s claim that Moments was reasonable for the securities. （jdsupra）

The US District Court implied that NFT may be regarded as securities

Analysis based on this information:


The recent ruling by the U.S. District Court for the Southern District of New York on March 7, 2022 has confirmed that NFTs or Non-Fungible Tokens can be recognized as securities under certain circumstances. This ruling was made in response to a class-action lawsuit brought against NFT Moments, a basketball theme NFT, where the court determined that NFTs can be classified as investment contracts using the Howey’s test.

The Howey’s test is a legal criterion used to evaluate whether an asset is considered as a security or not. The test defines an investment contract as a “transaction in which a person invests money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.” In the case of NFT Moments, the court applied this test and concluded that NFTs are investment contracts, and are therefore subject to the regulations of the Securities Act of 1933.

This ruling will have significant implications for the growing industry of NFTs, which have gained popularity due to their unique nature and ability to represent ownership of digital assets. However, it also raises concerns about regulating NFTs as securities, which would make them subject to the same stringent regulations as traditional securities. While some argue that this will provide investors with more protections, others believe that it could stifle innovation and growth in the NFT market.

In conclusion, the recent ruling by the U.S. District Court for the Southern District of New York confirms that under certain circumstances, NFTs can be recognized as securities under the Securities Act of 1933, and are therefore subject to the same regulations as traditional securities. This is a significant development in the evolving world of NFTs and will have far-reaching implications for investors, issuers, and regulators alike. The court’s decision also sets a precedent for future NFT-related cases and highlights the importance of evaluating the legal status of digital assets in the rapidly evolving world of blockchain and cryptocurrency.

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