Enabling Nonsecurity Fractional Ownership Of NFTs

By Thomas Mack and Richard Widmann (May 4, 2021, 4:36 PM EDT) -- Now that everyone is familiar with nonfungible tokens, or NFTs,[1] it appears that fractional interests in NFTs, or F-NFTs, are ripe for discussion.

In March, the U.S. Securities and Exchange Commission's Hester Peirce spoke at the Security Token Summit, and raised the important issue of whether F-NFTs could constitute securities under U.S. law. Peirce cautioned that anyone creating fractional interests in an NFT should "be careful that [they're] not creating something that's … a security," emphasizing the breadth of the definition of a security under U.S. law.[2]

And in April, a petition for rulemaking was filed with the SEC requesting regulatory...

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