PANews May 21 report, according to Cointelegraph, Hester Peirce, a commissioner of the U.S. Securities and Exchange Commission (SEC), explicitly stated in a public speech that NFTs with creator royalty mechanisms generally do not fall under the category of securities. Peirce pointed out that the characteristics of NFTs allowing artists to profit from resale are similar to the model of streaming platforms paying creators for copyrights, and this revenue distribution does not constitute 'profit-sharing rights' as defined in traditional securities.
Oscar Franklin Tan, Chief Legal Officer of Atlas Development Services, added that some media misinterpreted Peirce's statements, emphasizing that the SEC has never regarded creator royalties as a subject of securities regulation. He explained that when royalties solely belong to the original creator, their nature is closer to 'business income' rather than 'investment income'; however, if the NFT design involves distributing royalty profits to multiple holders, it may trigger securities compliance issues.