The Digital Chamber applauds Congressman Timmons’ leadership and the announcement of the New Frontiers in Technology Act (NFT Act). This is the first bill in the US Congress directly addressing the legal and regulatory treatment of non-fungible tokens (NFTs).
Following recent securities lawsuits against NFT companies such as Dapper Labs and DraftKings, and the Wells notice from the US Securities Exchange Commission against NFT exchange OpenSea, this critical legislation that ensures that consumptive-use NFTs, and their evolving use cases, are correctly designated as consumer goods, not financial products.
Key Provisions
- Defines Non-Fungible Tokens: The bill defines NFTs as any asset which is of such quality or limited production that it can be independently valued; which is recorded cryptographically on a public distributed ledger; that is the digital equivalent of a tangible or intangible good; or that can be exclusively possessed and transferred person to person, without reliance on intermediaries. It excludes any note, stock, treasury stock, security, future, security-based swap, evidence of indebtedness, certificate of interest, or any financial instrument that would indicate the existence of an investment contract.
- Creates Protections for “Covered” Non-Fungible Tokens: The bill creates clarity for “covered non-fungible tokens,” defining them as any NFT with the primary purpose of being a work of art, musical composition, literary work, or other intellectual property; a collectible, merchandise, virtual land, or video game asset; an affinity, reward, or loyalty; or a right, license, or ticket. This coverage does not protect NFTs that are marketed by an issuer or promoter primarily as an investment opportunity or making actual or implied actions designed to increase the value of the token.
- NFT Study: Finally, the Act directs the Comptroller General of the United States, a role within the General Services Administration—and not, importantly, a financial regulatory body—to carry out a study of non-fungible digital assets within one year of the enactment of this bill.
TDC Efforts
The Digital Chamber has worked with digital asset champions across industry, Congress, and regulatory bodies, to advocate for common sense legislation that will end the predatory and out-of-jurisdiction enforcement actions of the SEC against the NFT industry. The Digital Chamber has consistently been at the forefront of groundbreaking policy and regulatory conversations that served to lay the groundwork for this bill, fighting for the NFT industry to thrive within the United States.
Your Support is Crucial
Help the digital asset industry flourish responsibly without the hindrance of misapplied securities regulation. Contact your Representatives in Congress and voice your support for this important bill. By supporting this Act, you can ensure continued technological innovation, greater consumer protection, and a true home within the United States for blockchain technology.