Overreach. Jurisdictional landgrab. Regulation by enforcement. These terms and expressions — and many more “colorful” turns of phrase — are used by some to describe the Securities and Exchange Commission’s approach to enforcement at the intersection of digital assets and the federal securities laws. The SEC has repeatedly rejected such claims and has yet to act upon industry calls for increased clarity and guidance.
But it is the SEC’s most recent enforcement actions — its first two cases involving nonfungible tokens — that have yet again brought forth the SEC’s critics. What should we make of these first-of-their-kind enforcement actions? Doesn’t the lack of fungibility of NFTs move these tokens outside the SEC’s jurisdictional reach, making this the latest example of overreach? Or are these matters simply the latest actions in line with the SEC’s longstanding enforcement approach?