There is still no clear definition for NFTs in the classification of SEC. It's believed that SEC refrains from labeling it as securities even if they have many common points with other securities because once they are labeled as securities, they will be regulated by SEC.

![classification of nfts by sec crypto.png](https://images.hive.blog/DQmWdwLtUA2FczQiCrbxVt8tchss5MqcLPshjfbXWMH1zDi/classification%20of%20nfts%20by%20sec%20crypto.png)

The lawsuit of Yuga Labs (developers of Bored Ape NFTs) is very important for crypto ecosystem as the case pushes SEC to clarify the classification of these digital assets. 

### Can NFTs be Securities?
Let's remember the definition of security (finance) by [Wikipedia](https://en.wikipedia.org/wiki/Security_(finance))

> A security is a tradable financial asset.

So, the NFTs may be the tradable financial assets for some investors who are using these digital assets for trades to make gains. 

Tradable ✅
Assets (Digital) ✅
Used for Financial Gains ✅

Until now it sounds like an NFT is an amazing security asset which is powered by blockchain. YET, not all NFTs are used for that purpose!

### NFTs for ART, "Maybe" 

> The potential class-action suit against Yuga effectively will allege that customers bought artworks, expecting them to increase in value based on an artist’s (or here, collection’s) reputation. - [Decrypt](https://decrypt.co/105871/yuga-labs-threatened-with-possible-class-action-lawsuit)

SEC would not dare to consume their time and effort working on piece of art NFTs that are not used for the purposes that security asset traders have.

At that point, the case of Yuga Labs will be interesting.

**Option 1** -> Bpred Apes are piece of art, no intention to regulate
**Option 2** -> Bored Apyes are securities, related regulations. 

If you buy Mona Lisa for $1 and you sell it to somebody for $5M, then it is just a situation in which the piece of art is valued more by another person. 

![governance .png](https://images.hive.blog/DQmegeTwHSAYcpog6hGU9FSMkSTcbmJ3gmWHUy1tqsr1YXo/governance%20.png)

### Governance Tokens & NFTs - Securities or not?
Meanwhile, APECoin is used for governance via DAO on Ethereum Mainnet. Seeing these digital assets as securities will end up having serious concerns for any regulator. I think both options have huge pros and cons for crypto.

In te scenarios when the NFTs are commodities, securities or something different, it will have a huge impact on the price of NFTs because many people buy NFTs to make gains from sales and holding some money (for several purposes) in the forms of digital assets.

### What would be Good for Crypto?
I think the most important part of it is the benefit for the crypto ecosystem. If the definition will halt or slow down the development of the ecosystem, then it is unfavorable. Minimum or no fees + Freedom to trade or send are important criteria for that. Noone wants to pay more taxes & Freedom is crucial!

At that point, I think the NFTs need to be scrutinized and classified before making a final decision. The inner ecosystem of NFTs is purely fascinating. Yet, when all types of NFTs are treated in the same way, I believe the problems are inevitable.


What do you think about the case? 👇

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