Magic Eden CEO Welcomes ‘Regulatory Clarity’ After SEC Threat to NFT Rival OpenSea
When the NFT market OpenSea signaled that it was braced for a regulatory crackdown final month, the disclosure delivered a jolt to Magic Eden CEO Jack Lu.
“All of it occurred very immediately,” he mentioned in an interview with Decrypt (video beneath), including that the San Francisco-based agency has not obtained a so-called Wells discover from the U.S. Securities and Trade Fee (SEC).
OpenSea mentioned it obtained a letter from the SEC alleging that NFTs buying and selling on its platform are securities. The NFT market’s co-founder and CEO Devin Finzer, in the meantime, mentioned that the agency is ready to “rise up and battle.”
Whereas the regulator has introduced enforcement actions in opposition to NFT tasks earlier than, OpenSea’s revelation represented one thing new. It signaled that the SEC has begun scrutinizing entities that present buying and selling platforms for NFTs, and never simply those who initially provide them.
Earlier than Magic Eden emerged because the main NFT market by quantity, OpenSea was the go-to venue for digital artwork and profile image (PFP) collections. Tasks just like the Bored Ape Yacht Membership and Artwork Blocks, which commerce on Magic Eden too, catapulted OpenSea to the forefront of the buzzy market in 2021 and 2022.
Magic Eden isn’t at present within the SEC’s crosshairs, however Lu acknowledged {that a} lawsuit in opposition to OpenSea might have broad implications for a nook of crypto that’s been left comparatively untouched by regulators in comparison with exchanges or cryptocurrency issuers.
“The dearth of regulatory readability principally comes with the territory,” Lu mentioned. “To the extent that this incident goes to create extra readability within the area, I welcome that.”
From distinctive works of digital artwork to human-readable blockchain addresses, NFTs can signify possession in a myriad of issues. Some legal professionals have argued that the SEC would face challenges in exerting authority over the NFT area as a result of the regulator doesn’t have a pronounced function in policing markets for bodily positive artwork or collectibles.
No matter what might occur to OpenSea, Lu mentioned that Magic Eden’s enterprise has been guided by a want to do proper by regulators. He mentioned, “The final precept for us is we need to be good actors and actually be compliant within the ecosystem.”
When the SEC filed high-profile lawsuits in opposition to Coinbase and Binance final yr, the regulator supplied a listing of cryptocurrencies buying and selling on the exchanges that it believes are securities. Shortly after, corporations like eToro and Robinhood dropped assist for them.
When requested whether or not Magic Eden is ready to delist NFTs that the SEC may label as securities, Lu demurred, suggesting the agency would view any expenses first.
“Lots of these items relaxation on nuances and the factual circumstances of the case,” Lu mentioned, including that “it is probably not useful to use hypothetical issues to the long run.”
Edited by Andrew Hayward
