FTX US trading platform president Brett Harrison warned that a platform that will host royalty-free NFTs could face regulatory harassment.
On the eve of the launch of the NFT trading platform, the FTX US crypto exchange announced on its website that it would avoid projects offering royalties. “We will reject any NFT in the project collection that distributes or advertises royalty distribution to NFT holders.”
FTX US President Brett Harrison explained that many NFT projects compete with each other to add value to their tokens for their holders. One of the ways to get investors interested is to return some of the commission received when trading NFT. This is royalty, which is designed to encourage investors to invest in NFT over the long term. According to the head, the trading floors are concerned that this could lead to a violation of US securities laws. “We are ready to host NFT projects that pay royalties to their creators, but we cannot offer a platform for projects that distribute royalties from the sale of collections to NFT holders. In this case, the NFT, which guarantees you a percentage return on the sale of the pool of assets, starts to look like a security. ”
According to Brett Harrison’s warning, OpenSea is in a vulnerable position. Many NFTs that projects have placed on the site offer royalties, and this can be regarded by regulators as a sign of a security. Therefore, the platform last week refused to host the NFT Turtle DAO collection with obvious signs of royalty. The site does not want to be involved in another scandal after OpenSea employee Nate Chastain was accused of insider trading. However, site manager Devin Finzer argues that the employee’s actions cannot be qualified as insider trading.
