U.S. Court Rules BAYC NFTs Are Not Securities

A landmark decision in the United States has brought renewed clarity to the regulatory status of non-fungible tokens (NFTs). A federal judge has dismissed the class-action lawsuit filed in 2022 against Yuga Labs, the company behind the Bored Ape Yacht Club (BAYC), ruling that BAYC NFTs and ApeCoin do not qualify as securities under U.S. law.

A Key Legal Win for the NFT Industry

The ruling, delivered by Judge Fernando M. Olguin, carefully examined the arguments under the Howey test — the three-part legal standard used in the U.S. to determine whether an asset constitutes an “investment contract” and therefore falls under securities regulation.

The judge concluded that the plaintiffs failed to demonstrate that BAYC NFTs or ApeCoin met all elements of the Howey test. Specifically:

There was no evidence of a “common enterprise” linking the purchasers’ fortunes to those of Yuga Labs.

Buyers could not reasonably expect profits to be derived from the managerial or entrepreneurial efforts of Yuga Labs.

Marketing statements suggesting future benefits did not, in themselves, transform the NFTs into securities, particularly since the tokens primarily provided membership and cultural utility, rather than functioning as speculative investment vehicles.

This decision effectively rejects the claim that Yuga Labs misled investors by promoting the NFTs and ApeCoin as investment products.

Broader Implications for Digital Assets

This ruling represents a significant legal precedent for the NFT sector. It reinforces the idea that NFTs designed as collectibles, cultural assets, or membership tokens may not fall under securities regulation, provided they do not involve clear profit expectations tied to a central entity.

However, the court also emphasized that this decision is specific to the BAYC case and does not provide blanket immunity for all NFTs. Each project will continue to be assessed individually, based on its structure, marketing, and economic reality.

Regulatory Context

The decision arrives at a time of heightened regulatory scrutiny in the U.S. Crypto companies have faced increased pressure from the Securities and Exchange Commission (SEC) to classify various digital assets as securities. The BAYC case stands out as one of the most high-profile NFT legal battles to date, and the court’s conclusion may serve as a reference point for future cases involving NFTs and utility tokens.

For NFT creators and platforms, this ruling highlights the importance of clear utility design, transparent communication, and avoiding explicit investment promises to remain outside the securities perimeter.

Author: Brian LECLERE

Sources: Bitcoin.com News, MEXC News, Phemex, FinanceFeeds