More Enforcement Actions To Come For NFTs Says Upstream’s Elenowitz

NFTs and Securities

Mark Elenowitz, an entrepreneur and self-described Wall Street veteran with a resume to back it up, produced one of the few regulatory-related presentations at NFT.NYC last Thursday.

Titled “Innovation And Regulatory Challenges in Digital Securities and NFTs,” not only did Elenowitz provide guidance, but pointed out that certain holders and purveyors of NFTs today may be headed for a meeting with the Internal Revenue Service (IRS) or an enforcement action by the Securities and Exchange Commission (SEC) in the future.

The success of Elenowitz’s own business(es) appears to be partially banking on the fact that compliance is no easy task in the current, wider NFT marketplace. He just launched Upstream, a Seychelles-based MERJ exchange powered by another one of his company’s, a FINRA compliance vendor called Horizon.

Upstream seeks to offer access to “IPOs, NFTs, celebrity ventures” according to its website. For example, given the challenges around securities regulations like those in the United States and certain NFT models, his exchange recently provided the ability to “geo-fence” an offering. This solution speaks to increasing wariness of regulators in the U.S. by market participants as well as the need for an easier and less costly way to be a security token.

(Upstream Exchange blog: “Music and film using NFTs to drive the future of fan engagement”)

Notably, there was no talk about whether NFTs should be under SEC or CFTC jurisdiction. In fact, Elenowitz believes many of today’s NFT projects fall under the securities designation unless they are a collectible only or non-fungible utility.

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What ‘Crypto Winter’? NFT Community Unites at NFT.NYC


1,500 speakers, 15,000 attendees and an agenda 56 pages long (see the PDF) – NFT.NYC was huge this past week and included a badge pick-up line stretching halfway around a Manhattan city block for much of the day on Monday.

There were no government types on stage, but the palpable momentum exhibited on and off-stage spoke to the importance of the NFT space to 20- and 30-somethings across the world – especially the United States – given the anecdotally-observed demographics of the show.

More observations about NFT.NYC:

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EU’s Vestager Hails NFTs as a New Way To Value and Compensate

Vestager at SXSW 2022

In an hour-long interview at South by Southwest in Austin, Texas,  Margrethe Vestager, Executive Vice President of the European Commission, offered the European regulator view on technology in the 21st century.

Though her purview does not necessarily cover cryptocurrency as CNBC interviewer Sara Eisen pointed out, Vestager did chime in on blockchain and non-fungible tokens (NFTs), specifically.

She signaled hopeful curiosity:

“The NFT is a new thing. I find it really interesting because, first of all, it questions everything you know about value. And second, maybe it’s a new way for artists and musicians and to get a stronger bite of the value that they create? And that obviously is really interesting. So we follow [it], but it takes us a bit of time because we start to recruit new people [at the European Commission] – not every lawyer is a gamer (jokingly). We need to get more people on board.

I had a very interesting experience because I had at a group of three people advising me during the last mandate when we were preparing the Digital Markets Act. It was a lawyer, an economist and a technologist. To see the three of them working together was really interesting because it took them some time to get used to it. But then once they did, what they achieved was really interesting.”

On tech regulation momentum coming from Washington DC

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Many Assets To Be Identified Within NFT Framework says Ripple CEO Brad Garlinghouse

Brad Garlinghouse of Ripple

From crypto conference , CoinAgenda, in San Juan today, Brad Garlinghouse, CEO of Ripple (the former “peanut butter manifesto” maven of Yahoo!) provided an update on his company as well as thoughts on the coming tokenization wave of many assets.

Light editing for clarity…

On Ripple Performance in 2021

“The United States Securities Exchange Commission filed a lawsuit against Ripple on December 22. So almost a year ago, since that time Ripple has had a heroic 2021. Growth has been extremely strong in terms of our primary metric for success – payment transactions – and we’re still growing more than 100% year on year despite the fact we have sold zero new contracts in the United States in the last year. We’ve lost customers the United States.

XRP basically doesn’t trade in the United States. At Ripple, we sell enterprise blockchain despite all the things we do to keep regulatorily compliant – US companies are going , “Look. We’re gonna wait and see what happens.” But the good news is, when you go and talk to banks and institutions around the world, they don’t care. I was in the Middle East a few weeks – certainly in the UK – those customers are just paying because it adds value, it decreases their costs is improving the product experience for their customers… We’ve signed scores of contracts in 2021. It has been a great year -but zero contracts in the United States.”


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