The U.S. Securities and Exchange Commission has publicly clarified that non‑fungible tokens (NFTs) do not count as securities under federal securities laws, a position reiterated and expanded by SEC Chairman Paul Atkins. According to Atkins, NFTs are not securities because people buy them as digital collectibles, not as investments.The clarification comes as the SEC coordinates with the Commodity Futures Trading Commission (CFTC), to draw more distinct lines between various types of digital assets.This move is part of the SEC’s new “Project Crypto” plan, in which Atkins and his team define how different digital assets fit within existing laws to help all parties involved better understand what falls within and outside securities rules.The SEC says NFTs are not securitiesThe SEC identified four main types of digital assets that do not fall under securities law: digital commodities, digital tools, digital collectibles such as NFTs, and stablecoins. Paul Atkins said NFTs and physical collectibles are similar in that people buy them for personal interest or value, without expecting profit from someone else’s work. Additionally, the SEC considers how people use NFTs rather than what the name implies to determine whether it is a security.Unlike buying shares in a company, where you expect the organization to work and grow your investment over time, NFTs do not involve a company or team working to increase the asset’s value for buyers.During an interview, Atkins compared NFTs to baseball cards, memes, and other collectibles that people buy just to own rather than because they expect a company to increase their value, making them less of securities. However, he said the SEC may treat some NFTs as securities if they carry promises of profits or are part of a larger system in which people expect to earn money from a team’s work.According to the SEC chair, the agency is trying to define NFTs clearly, promote fairness, and allow innovation to continue while protecting users. With such clarity, creators now know how to better design their projects, and buyers understand what they are getting into when they purchase certain products. The SEC changes its approach to create clear crypto rules.Atkins said the SEC wants to create a more open and predictable environment where people can build products without fear of sudden penalties. To do this, the SEC will now explain how the system works step by step, rather than relying on enforcement actions.The chair said the U.S. has fallen behind in crypto development by as much as 10 years due to past mistakes where unclear rules made it difficult to innovate, and many projects either slowed or moved to other regions with easier laws.For this reason, the SEC launched its “Project Crypto” to help developers, exchanges, custodians, and investors understand how the agency treats digital assets under the law and reduce confusion.Atkins also explained that a security can lose its status if users no longer depend on a central team or company to create value. For example, if a project may fall under securities laws at the outset if it begins with a team doing work to grow value, but the situation can change if those promises are completed, rescinded, or no longer matter.The SEC plans to focus on understanding real-world use cases when classifying digital assets, rather than applying strict rules without context, to build a balanced system that allows innovation to grow while still protecting users.For instance, the agency may allow some crypto assets linked to investment contracts to trade on platforms regulated by other regulatory bodies.The SEC wants a more open, clear, and supportive approach to encourage innovation while still protecting users, rather than trying to control every part of the market. Similarly, clear rules allow creators to build products that comply with them and give buyers a better vantage point when purchasing.Get seen where it counts. Advertise in Cryptopolitan Research and reach crypto’s sharpest investors and builders.