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Today it broke that Yuga Labs was being investigated by the SEC over whether its Bored Ape Yacht Club NFTs and ApeCoin are unregistered securities. This is something I first thought about way back when APE was released to the NFT holders and I am a little surprised it has taken this long to hear about the investigation. Barring any sort of court case or legislation, Congress does not have anything on the docket to deal with this so I would not expect it to come from the legislative branch and I highly doubt that a court case of significance will be completed anytime soon, NFTs are going to operate in this grey zone and regulators will target specific ones depending on a variety of things like popularity.
It goes without saying that BAYC has been one of if not the most successful NFT projects to date. Not only do they have a cult-like following but they have attracted some very wealthy individuals to buy their NFTs at pretty high prices (Eminem and Snoop Dogg). It was not just that thought that was bound to put them on the SEC's radar it was the continued growth and most importantly the introduction of ApeCoin.
ApeCoin has been something that dramatically sets the different Yuga Labs projects like BAYC, MAYC, BAKC, and the Otherside metaverse project apart from all other collections. It is important to note that while Yuga Labs did not have any part in launching the token they were allotted 16% of the total supply. Now to you and I, that may make sense but to the regulatory agencies, it is something that they are going to want to scrutinize. Due to the Ripple case, this could be something that they try to go after once that court has decided and a ruling one way or another is issued. I see it as either a further erosion of the rules that the SEC is supposed to follow if they win the Ripple case or a retaliation move if they lose the Ripple case.
Over the next few months as the Ripple case slowly continues to move along in the court system the biggest indicator or what the future will hold will be the outcome of the November elections. This election cycle has a ton of crypto money that has been spent in it and if the candidates who received crypto wealth win it could really facilitate crypto legislation next year. We have seen a ton of legislation introduced in the last 18 months that pertains to crypto laying the groundwork for regulation/clarification to occur next year. I would say there is a pretty high probability that the outcome of the elections will result in the SEC losing the ability to regulate crypto and for the CFTC to finally take over. This could easily rid the court system of possible lawsuits like are being faced right now by a ton of different companies in the US. Till the elections are over with I would expect to see less and less news like this come out because of the people/votes it could anger and lead to the Democrats facing backlash over how the administration is handling things.
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