The U.S. Securities and Exchange Commission (SEC) has officially closed its investigation into Yuga Labs without taking any enforcement action. This is a significant milestone, not only for Yuga Labs – the company behind the popular NFT collection Bored Ape Yacht Club (BAYC) – but also for the entire digital asset industry.

NFTs Are Not Securities

The investigation, initiated by the SEC in October 2022, focuses on determining whether Yuga Labs’ NFTs and apecoin (APE) tokens are considered securities under the Howey Test. If classified as securities, these assets would be subject to strict regulations, including registration and financial reporting requirements.

However, on March 3, Yuga Labs announced that the SEC had officially closed its investigation. The company asserted that this was a major victory for the NFT industry and the creators in this ecosystem. In Yuga Labs' view, NFTs should not be considered securities under federal securities laws.

Policy change under Trump

This event comes in the context of the SEC's tendency to reduce the intensity of oversight of the cryptocurrency market, especially after the Biden administration transferred power to the 47th President of the United States, Donald Trump. Previously, under SEC Chairman Gary Gensler, the agency increased its oversight of the blockchain industry, targeting many large companies such as Coinbase, Gemini, Kraken, Opensea, and Robinhood. However, the SEC has recently closed investigations into these companies, showing a significant change in the regulator's approach.

In addition, the legal victory of Richard Heart – founder of HEX – also marked another defeat for the SEC when a federal judge declared that the agency lacked jurisdiction to pursue his cryptocurrency-related complaints.

The future of the crypto industry and the role of the SEC

Recent developments reflect a shift in the SEC's approach to digital assets. While the agency has previously aggressively sought to impose strict regulations, resistance from the judiciary and the new administration has forced it to adjust its strategy.

The SEC's reduced oversight could open the door for the proliferation of blockchain platforms, NFTs, and cryptocurrencies. However, the question is whether this will lead to an unregulated financial environment, or, on the contrary, will foster innovation within a more rational framework.

Regardless, Yuga Labs escaping the investigation scot-free is a clear sign of a shift in SEC policy and could lay the groundwork for a more open future for the digital asset industry.