Hester Peirce Says NFT Fundraising Projects Like Stoner Cats, Flyfish Club Should Be Exempt from Securities Laws

SEC Crypto Task Force lead, Hester Peirce, has said that NFT-based fundraising projects like Stoner Cats and Flyfish Club should be exempt from securities regulations.

Hester Peirce, a member of the U.S. Securities and Exchange Commission (SEC) task force on cryptocurrencies, has suggested that the agency could provide an exemption for certain NFT-based fundraising projects from securities regulations.

During an interview with Bloomberg on Wednesday, Peirce, who is also known as "Crypto Mom" for her stance on digital assets, said that the SEC could use its authority to create an exemption for NFT projects like Stoner Cats and Flyfish Club.

"I think we could do it on NFTs as well," said Peirce when asked if the SEC could provide an exemption for a category of asset. "If we could provide some kind of framework or some kind of markers for NFT issuers to look to, I think it could be pretty helpful."

"I’m not sure we necessarily need to be providing a framework or guidelines for NFT issuers to reference, although I think that could be helpful," she added. "We can make an announcement of an exemptive nature regarding NFTs."

The SEC, under chair Gary Gensler, has been closely examining NFTs to determine which ones may be subject to securities laws.

Stoner Cats, an animated series co-created by actress Mila Kunis, raised $8 million through NFT sales, which granted buyers access to the show and made them part of the "Stoner Cats Collective." The NFTs were also resellable, with a 2.5% royalty on secondary sales going back to the creators.

Similarly, Flyfish Club, a private restaurant membership club, raised $14 million through NFT sales, structuring them with a resale royalty to benefit the project on each secondary market transaction.

However, the NFT market is no longer in the booming stage it once was. As Decrypt reported, the NFT market saw dismal performance in 2024, with trading volumes and sales counts reaching their weakest levels since 2020.

According to a report by blockchain analytics platform Token Terminal, annual trading volumes decreased by 19%, while sales counts dropped by 18% compared to 2023.

Peirce explained that an NFT’s exemption would depend on how it’s structured.

"You could have an NFT that’s a tokenized security, and it could be structured as an NFT," said Peirce. "Obviously that’s not going to be carved out."

Last week, Canary Capital submitted a filing to the SEC for the creation of an exchange-traded fund (ETF) that will track PENGU, the governance token for the Pudgy Penguin ecosystem.

The ETF would also include Pudgy Penguin NFTs and other digital assets like Solana and Ethereum to facilitate transactions, making it the first ETF to incorporate NFTs alongside cryptocurrencies.