Key Points
- •The US court ruled Bored Ape NFTs are not securities.
- •Judge ruled NFTs lack "common enterprise" requirement.
- •Event influences NFT market regulation and legal risks.
A U.S. federal court ruled that Bored Ape Yacht Club NFTs are not securities, dismissing a lawsuit against Yuga Labs on the grounds they lack a "common enterprise."
The ruling provides legal clarity for NFT companies, potentially guiding future regulatory approaches and impacting market dynamics, despite BAYC's price drop and ongoing market saturation concerns.
A US federal court has ruled that Bored Ape Yacht Club NFTs are not classified as securities. This judgment followed a class-action lawsuit against Yuga Labs, setting a new legal standard for NFTs traded on third‑party platforms.
The case was overseen by Judge Fernando M. Olguin, who determined that Bored Ape NFTs do not meet the Howey test standards. This decision was based on the absence of a shared operation between Yuga Labs and NFT owners. Judge Fernando M. Olguin, U.S. Federal Judge, California, "Bored Ape NFTs do not meet the Howey test standard for securities, notably due to the lack of a 'common enterprise' between Yuga Labs and NFT holders."
The verdict provides legal clarity, potentially reducing regulatory risk for NFT creators. Despite this outcome, BAYC prices have significantly dropped due to market saturation and decreased cultural relevance.
The ruling did not lead to immediate changes in related tokens' prices. However, it may encourage developers to design NFTs that focus on utility to avoid security classifications. This could foster innovation within the NFT sector.
Despite achieving regulatory clarity, Bored Ape NFTs suffered considerable value depreciation. Broader market conditions predominantly influenced this trend.
This decision contrasts with previous cases where NFTs met security guidelines. It underscores the distinction for NFTs chiefly traded on decentralized platforms. The verdict could result in long-term effects on NFT market dynamics.