The U.S. Securities and Exchange Commission is scrutinizing creators of nonfungible tokens and the crypto exchanges where they trade to determine whether some of the assets run afoul of the agency’s rules, according to people familiar with the matter.
A focus of the inquiry is on whether certain NFTs, digital assets that can be used to denote ownership of things such as paintings or sports memorabilia, are being utilized to raise money like traditional securities, the people said. Over the last several months, attorneys in the SEC’s enforcement unit have sent subpoenas demanding information about the token offerings.
The inquiry is the latest attempt by the SEC under Chair Gary Gensler to ensure the crypto market adheres to its regulations. In February, the commission and state regulators levied a record $100-million fine against BlockFi, a popular virtual-currency exchange, for failing to register products that pay customers high interest rates to lend out their digital tokens.
As part of its review, the SEC is seeking information on so-called fractional NFTs, which involve…
