Bored ape NFTs versus the SEC
Regular readers will know I have a love/hate relationship with NFTs. On the plus side, they’re an interesting way for artists to connect with collectors and fans. On the other there are more scams than you can shake a stick at.
News that the SEC, the US financial regulator, is looking at NFTs has been circulating for a while. That it appears they’re looking VERY closely at Bored Apes triggered a bit of a meltdown. The financial press seems to largely report it as part of the ongoing investigation, while the crypto sphere is screaming foul. Or at least some bits of it are.
The question, from what I’ve read, isn’t if the Bored Ape Yacht Club is a scam (or uses racist tropes – different story), but rather whether ApeCoin is a security.
I’ll be honest, I raised an eyebrow when it was launched. From what I can work out, someone pays to buy an ApeCoin, and by virtue of that transaction gets a say in what happens to the Bored Apes. It appears they can manipulate aspects of the Bored Ape ecosystem, which in turn could manipulate prices. While you can argue “that’s how companies work”, I think the issue is whether this has come close enough to the regulatory sphere for the SEC to take action.
There’s a lesson to relearn here. When new tech comes along that’s a little ahead of the regulatory curve one of two things will happen:
either the tech wasn’t as “far out” as everyone thought, and is caught by regulation anyway
the regulatory landscape evolves to engulf it.
For a little while at least there’s a grey area that some can play in and make hay while it lasts. I suspect this is coming to an inevitable end.