Democratic congressman criticized the SEC’s ‘heavy-handed approach’ to OpenSea concerns

Pro-crypto Congressman Willie Nickell (D-NC) has taken US Securities and Exchange Commission (SEC) enforcement action against OpenSea after the regulator said it filed suit against the NFT marketplace.

In a tweet, Nickell criticized the SEC's “aggressive use of ‘regulatory enforcement'” as a “clear abuse of power that erodes trust and transparency in our regulatory system.”

He accused the regulator of threatening to “impede the growth of digital innovation in the United States”, and asked the SEC to work with Congress to create “clear, fair rules” governing digital assets and Web3 technologies.

Crypto industry figures have joined Nickel in criticizing the SEC, with Variant Fund's chief legal officer, Jake Chervinsky, accusing the regulator of “completely losing the plot.”

Gemini founder Cameron Winklevoss, who donated $1 million to Republican candidate Donald Trump's presidential campaign, argued that “the ‘reset' with crypto has turned into an escalation of the war on crypto.”

Winklevoss' comments appear to be indicative of efforts by crypto grassroots and lobbying organizations to “reset” ties with the Democratic Party after electing Kamala Harris as its presidential nominee.

After the Trump campaign accused the Biden administration of pursuing a “war on crypto,” Trump vowed to “fire” SEC Chairman Gary Gensler — even though he doesn't have the power to remove Gensler without cause.

SEC and OpenSea

NFT marketplace OpenSea said on Wednesday it received a notice from the SEC's Wells, informing it of the regulator's intention to bring enforcement action.

The announcement represents an expansion of regulatory oversight of digital assets to cryptocurrencies (or cryptocurrency tokens), which the agency has previously argued are securities, NFTs, which represent a separate asset class.

The Blockchain Association, a pro-crypto lobby group, accused the SEC of “using the threat of executive action to expand its powers and treat digital art as securities.”

“The idea that a financial market regulator established in the 1930s would have jurisdiction over digital art in the 2020s defies not only common sense, but also the SEC's statutory authority,” Chervinsky wrote.

However, this question can be solved in another case. The SEC itself is facing a lawsuit from law professor Brian Frye and musician Jonathan Mann, seeking to force the agency to disclose what kind of NFTs it protects.

Edited by Andrew Hayward.