Despite all the intelligence at their disposal, human beings have failed rather sensationally at not making mistakes. This dynamic, in particular, has showed up on the surface quite a few times throughout our history, with each of the said appearances practically forcing us to look for a defensive cover. We will, however, solve our conundrum in the best possible way once we bring dedicated regulatory bodies into the fold. Having a well-defined authority across each and every area was a game-changer, as it instantly concealed our many shortcomings, and therefore gave us a shot at all those possibilities that we couldn’t even have imagined in an alternate reality. Unfortunately for us, the utopia to emerge from it was pretty short-lived, and if we are to tell you why, it was very much down to technology. The moment technology got its layered nature to take over the scene; it allowed every individual an unprecedented chance to exploit others for their own benefit. In case the stated development didn’t sound bad enough, the whole runner soon began to materialize on such a massive scale that it expectantly overwhelmed our governing forces and sent them back to square one. After spending a lengthy spell in the wilderness, though, it seems like the regulatory contingent is finally ready to make a comeback. This has, in fact, gotten more and more evident over the recent past, and a new investigation should only solidify the shift moving forward.
According to a report from Bloomberg, the U.S. Securities and Exchange Commission is investigating Yuga Labs, the company behind that famous Bored Ape Yacht Club NFT collection, over whether sales of its digital assets violate federal law. The key component here is how Yuga’s non-fungible tokens are possibly similar to stocks, and therefore they should follow the same disclosure regulations. Apart from it, the commission is also looking into how apeCoins, the Ethereum-based governance and utility tokens used within the APE ecosystem, were distributed to holders of Bored Ape Yacht Club, Mutant Ape Yacht Club, and Bored Ape Kennel Club members. The latter probe is largely driven by a belief that discrepancies within the distribution might have unfairly benefitted some of the investors.
The relationship between SEC and cryptocurrency has been polarizing for a while now. In fact, just as few weeks ago, the commission made a big statement in a similar context by fining Kim Kardashian more than $1 million for promoting a cryptocurrency without properly disclosing that she was paid to do so.
Coming back to the case in question, it’s unclear where the investigation will go, as there are, at the moment, no such reference points to decide which cryptocurrencies actually qualifies to be securities. However, according to SEC chair, Gary Gensler, the commission plans to “regulate by enforcement”, which basically translates to assessing the operations and then coming to a decision about its acceptability, instead of just championing pre-written rules.
When quizzed about the investigation, a spokesperson for Yuga Labs said:
“It’s well-known that policymakers and regulators have sought to learn more about the novel world of Web3. We hope to partner with the rest of the industry and regulators to define and shape the burgeoning ecosystem. As a leader in the space, Yuga is committed to fully cooperating with any inquiries along the way,”