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The Securities and Exchange Commission is now focusing its attention on fractional NFTs. This isn't the first warning from SEC Commissioner Hester Peirce. Since March of 2021, she has cautioned that fractional NFTs stretch the definition of "non-fungible," and those issuers should "always ask those questions" as to whether the NFTs qualify as securities before proceeding. We believe that the pioneers of the digital asset community must take the initiative in building the foundations of the regulatory framework in anticipation of regulatory oversight. Platforms and developers minting NFTs should have a duty to very clearly define the NFTs once they've been minted, which will be critical to building the marketplace framework.
Here is a snippet: “The U.S. Securities and Exchange Commission is scrutinizing creators of nonfungible tokens and the crypto exchanges where they trade to determine whether some of the assets run afoul of the agency’s rules, according to people familiar with the matter”.
Read the full article from Bloomberg
This question has been front and center for some time now. Institutional participation in digital asset securities (security instruments like shares of equity) has been rather de minimis because digitizing an asset does not create any efficiencies or cost savings in the current regulatory environment. As regulatory guidance becomes clearer, we will likely see a path forward where blockchain efficiencies can be realized in a compliant manner. Digital asset securities, governed by the SEC, can rely on blockchain infrastructure to enable efficiencies in the trade lifecycle. Once these efficiencies can be realized, there is a clear advantage to digitizing securities, and that is when institutional investor participation is expected to become more prevalent.
Here is a snippet: “David said the benefits provided by digital asset securities are too great for investors to overlook. For institutional investors, the key benefits of block-chain-based settlement for digital asset securities include real-time settlement (86 percent of respondents said this was among the top benefits), transparency (71 percent of respondents), and fractional ownership (61 percent of respondents).”
Read the full article from Institutional Investor
Today, investors are looking for new opportunities outside traditional markets, driving the demand for alternative assets. Marketplaces have responded to this need by offering fractional ownership of significant pieces of sports memorabilia through initial public offerings, allowing investors to purchase shares through their apps. The strategy is evolving quickly, with many new participants and innovations elevating this niche market to mainstream.
Here is a snippet: “NFTs and trading cards have been two of the more popular investing vehicles for consumers over the past two years. NFT volume trading reached $13.1 billion and the domestic trading card market is anticipated to reach $61 million by 2027."