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Yuga Labs, the blockchain innovator behind the popular Bored Ape Yacht Club (BAYC) non-fungible token (NFT) series, declared today that the U.S. Securities and Exchange Commission has concluded its inquiry without pursuing enforcement action.
Yuga Labs: ‘NFTs Are Not Securities’
Regulators terminated their scrutiny of the company this week, ending a probe launched in October 2022. The SEC’s inquiry, which zeroed in on the classification of Yuga’s NFTs and its native token, apecoin (APE), under the Howey Test’s framework, sought to determine whether these assets fell under federal securities laws.
Such a designation could have mandated rigorous disclosures and compliance protocols. This development aligns with the agency’s expanding oversight of digital asset markets under the Biden administration. With Donald Trump, the 47th U.S. President being crypto friendly, things have changed.
On March 3, Yuga Labs revealed the case was over, stating:
After 3+ years, the SEC has officially closed its investigation into Yuga Labs. This is a huge win for NFTs and all creators pushing our ecosystem forward. NFTs are not securities.
This development arrives alongside a wave of regulatory retreats, as the SEC has recently shuttered inquiries into prominent entities such as Coinbase, Gemini, Kraken, Opensea, and Robinhood. In a parallel legal triumph, HEX founder Richard Heart secured victory against the agency after a federal judge declared the SEC’s jurisdictional reach insufficient to pursue claims tied to his cryptocurrency endeavors.
These rulings illuminate the SEC’s change following the transition from Biden to Trump after the regulator under Gary Gensler tried to assert authority over fast-evolving digital asset markets. Judicial pushback against overextension—coupled with agencies’ struggle to reconcile decades-old legal doctrines with decentralized technologies—hints at a shifting paradigm.