$ETH Peirce, from the SEC, says that NFT rights do not convert tokens into securities

Hester Peirce, commissioner of the U.S. SEC, states that NFTs with author royalties are not necessarily securities. The commissioner of the U.S. Securities and Exchange Commission (SEC), Hester Peirce, has declared that many non-fungible tokens (NFTs), including those with mechanisms to pay royalties to creators, likely fall outside the scope of federal securities legislation.

In a recent speech, Peirce stated that NFTs that allow artists to earn resale income do not automatically qualify as securities. Unlike stocks, NFTs are programmable assets that distribute income to creators or artists. The SEC official said that this reflects how streaming platforms compensate musicians and filmmakers.

"Just as streaming platforms pay royalties to the creator of a song or video each time a user plays it, an NFT can allow artists to benefit from the appreciation of their work after its initial sale," Peirce said.

Peirce added that the feature does not provide NFT owners with any rights or interests in any commercial enterprise or benefits "traditionally associated with securities."