Securities and Exchange Commission vs. Metaverse

Securities and Exchange Commission vs. Metaverse

The US Securities and Exchange Commission (SEC) and its chair, Gary Gensler, have a reputation for their hostility towards cryptocurrencies, but so far, the NFT has been a hazy area that some market participants hope will continue to be ignored, rather than Ashraf.

The lack of clarity around NFTs is due in part to the fact that a variety of different types of products are sold as NFTs, from artwork to virtual land, and thus a blanket statement (this NFTs either be or incorrect stock) reasonably.

Each NFT project seems to be taken on its own individual merits, and there is still nothing that can be construed as an indicative precedent or case.

This leads us to reports that Yuga Labs is being investigated by the Securities and Exchange Commission. This is very significant since Yoga is the creator of, among other products, Bored Ape Yacht Club (BAYC), the most famous NFT group in existence.

Did Yoga sell the stock?

First, it is necessary to distinguish the main products of Yuga. Most famous, there are the original BAYC NFTs, which are icons linked to cartoon monkey illustrations, and then (among other things) there are Otherdeeds, which are NFTs that grant ownership of virtual plots that are not yet complete.

This virtual land will be among another long-awaited yoga project. Otherside is a metaverse and gaming universe still in development (and likely to take a long time to complete), in collaboration with Impropable, a British metaverse developer, and Animoca Brands, a web 3 venture capital firm.

The original BAYC NFTs (although not everyone’s taste) look like works of art. There are arguments to be made that they have other facilities and should be treated accordingly, but when it comes to the SEC, other Earth tokens are likely to look more like securities.

Whether or not something has security properties can be assessed by running it through the Howey test. The origins of this test lie in a 1946 case where The Howey Company sold plots of land in a citrus orchard, then buyers leased it to the company in the hope that Howey would cultivate the land and make a profit, which would be shared among the company. and land buyers.

This arrangement was judged to be an investment contract, meaning that the securities were sold. From this case, four questions emerge (the creation of the Howey test) that can be used to assess whether or not the arrangement is indeed an investment contract and, therefore, within the jurisdiction of the SEC:

  • Is there an investment for money?
  • Does the investment go to a joint venture?
  • Is there an expectation of profits?
  • Do profits come from seller efforts?

Do other business sale sign yes On those four questions? It can be said that it is, but not everything is straightforward, and there is an additional consideration: We’re dealing with a metaverse-related product, and metaverse development, which obviously didn’t exist as a project when Howey was selling sections of a citrus orchard, has its own distinct characteristics.

nascent industry

NFTs and metaverse development are emerging industries that do not always clearly fit into existing frameworks.

In the case of the Otherdeeds, it can be shown that unlike the buyers of Howey’s land in the 1940s, the promise made by the seller is not future income dependent on Yuga providing a working product.

Those who advocate the development of the metaverse present the concept of a permanent virtual world operating interconnected and parallel to the real world, and should be treated as a digital extension of the physical world.

In the real metaverse, virtual landlords own property in the same ways we do property in the physical world, and are free to use it as they like.

By this account, buying land in the metaverse is like buying land in the real world, and buying it before development is complete is like buying off-plan property. Accordingly, if the metaverse industry had a traditional equivalent, it would be the real estate industry.

Buyers may hope or expect that the value of their metaverse property will increase (just as physical home owners do), but there should also be buyers who are already planning to make personal use of their virtual land. After all, a metaverse or gaming environment would be meaningless if users weren’t active in its digital spaces.

However, even this perspective may be unnecessary in the case of Otherdeeds, as early buyers had to agree to file NFT Purchase Agreement It states that they “do not purchase any other act with the intent to or expect profits from any appreciation of value or other act or any rights of access that may be granted from time to time by Animoca or third parties.”

Whether any of these arguments and caveats will wash down with the SEC is open to speculation, but although the NFT space is largely geared toward commerce, Otherdeeds have not been emphatically sold as a means of profit, and appear to be intended to provide a real benefit to their owners.

When it comes to formal oversight, NFTs and the construction of the metaverse are new, unpredictable, and pushing digital boundaries in ways that, if they are to be examined in a coherent way, may require entirely new regulatory frameworks.

The US Securities and Exchange Commission (SEC) and its chair, Gary Gensler, have a reputation for their hostility towards cryptocurrencies, but so far, the NFT has been a hazy area that some market participants hope will continue to be ignored, rather than Ashraf.

The lack of clarity around NFTs is due in part to the fact that a variety of different types of products are sold as NFTs, from artwork to virtual land, and thus a blanket statement (this NFTs either be or incorrect stock) reasonably.

Each NFT project seems to be taken on its own individual merits, and there is still nothing that can be construed as an indicative precedent or case.

This leads us to reports that Yuga Labs is being investigated by the Securities and Exchange Commission. This is very significant since Yoga is the creator of, among other products, Bored Ape Yacht Club (BAYC), the most famous NFT group in existence.

Did Yoga sell the stock?

First, it is necessary to distinguish the main products of Yuga. Most famously, there are the original BAYC NFTs, which are icons linked to cartoon monkey illustrations, and then (among other things) there are Otherdeeds, which are NFTs that grant ownership of virtual plots that have not yet expired.

This virtual land will be among another long-awaited yoga project. Otherside is a metaverse and gaming universe still in development (and likely to take a long time to complete), in collaboration with Impropable, a British metaverse developer, and Animoca Brands, a web 3 venture capital firm.

The original BAYC NFTs (although not everyone’s taste) look like works of art. There are arguments to be made that they have other facilities and should be treated accordingly, but when it comes to the SEC, other Earth tokens are likely to look more like securities.

Whether or not something has security properties can be assessed by running it through the Howey test. The origins of this test lie in a 1946 case where The Howey Company sold plots of land in a citrus orchard, then buyers leased it to the company in the hope that Howey would cultivate the land and make a profit, which would be shared among the company. and land buyers.

This arrangement was judged to be an investment contract, meaning that the securities were sold. From this case, four questions emerge (the creation of the Howey test) that can be used to assess whether or not the arrangement is indeed an investment contract and, therefore, within the jurisdiction of the SEC:

  • Is there an investment for money?
  • Does the investment go to a joint venture?
  • Is there an expectation of profits?
  • Do profits come from seller efforts?

Do other business sale sign yes On those four questions? It can be said that it is, but not everything is straightforward, and there is an additional consideration: We’re dealing with a product related to metaverses, and metaverse development, which obviously didn’t exist as a project when Howey was selling sections of a citrus orchard, has its own distinct characteristics.

nascent industry

NFTs and metaverse development are emerging industries that do not always clearly fit into existing frameworks.

In the case of the Otherdeeds, it can be shown that unlike the buyers of Howey’s land in the 1940s, the promise made by the seller is not future income dependent on Yuga providing a working product.

Those who advocate the development of the metaverse present a concept of a permanent virtual world operating interconnected and parallel to the real world, and should be treated as a digital extension of the physical world.

In the real metaverse, virtual landlords own property in the same ways we do property in the physical world, and are free to use it as they like.

By this account, buying land in the metaverse is like buying land in the real world, and buying it before development is complete is like buying off-plan property. Accordingly, if the metaverse industry had a traditional equivalent, it would be the real estate industry.

Buyers may hope or expect that the value of their metaverse property will increase (just as physical home owners do), but there should also be buyers who are already planning to make personal use of their virtual land. After all, a metaverse or gaming environment would be meaningless if users weren’t active in its digital spaces.

However, even this perspective may be unnecessary in the case of Otherdeeds, as early buyers had to agree to file NFT Purchase Agreement It states that they “do not purchase any other act with the intent to or expect profits from any appreciation of value or other act or any rights of access that may be granted from time to time by Animoca or third parties.”

Whether any of these arguments and caveats will wash down with the SEC is open to speculation, but although the NFT space is largely geared toward commerce, Otherdeeds have not been emphatically sold as a means of profit, and appear to be intended to provide a real benefit to their owners.

When it comes to formal oversight, NFTs and the construction of the metaverse are new, unpredictable, and pushing digital boundaries in ways that, if they are to be examined in a coherent way, may require entirely new regulatory frameworks.

#Securities #Exchange #Commission #Metaverse

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