The Securities and Exchange Commission’s (SEC) enforcement approach

The Securities and Exchange Commission’s (SEC) enforcement approach on crypto firms has left a lasting “regulatory overhang” within the industry, according to Devin Finzer, co-founder and CEO of OpenSea.

Speaking to Cointelegraph, Finzer said that during Biden's administration the agency unfairly targeted good actors in the crypto space, including OpenSea. “There's all sorts of digital assets, you know, you shouldn't treat them all the same. That's obvious. But I think the approach that the prior SEC was taking was kind of this, you know, very, very generic.”

The SEC issued a Wells notice — a formal notification that is often a precursor to enforcement action — to OpenSea in 2024, alleging that the NFT marketplace was operating as an exchange for unregistered securities. At the time, Finzer criticized the SEC for taking an approach of “regulation by enforcement” and said that OpenSea was prepared to “stand up and fight.”

With the SEC under new leadership by Chair Paul Atkins, Finzer is hopeful for a more balanced regulatory framework. “Good crypto regulation needs to balance, sort of, protecting consumers but also preserving the ability to innovate,” Finzer said. “It’s not just a one-size-fits-all problem, right?”

During the Trump administration, the SEC has scaled back enforcement actions against several crypto firms, marking a policy shift in the U.S. after years of enforcement actions led by former Chair Gary Gensler.

For instance, the agency has withdrawn legal challenges against exchanges Coinbase (NASDAQ:COIN) and Kraken, NFT companies Yuga Labs and OpenSea, and decentralized finance protocol Uniswap — most of them opened during Gensler’s term. The SEC has even dismissed its years-long case against Ripple (XRP).

During the 2024 U.S. election cycle, the crypto industry widely backed then-candidate Donald Trump, who promised to make the U.S. “the crypto capital of the planet.” Overall, crypto super political action committees, or PACs, donated over $119 million into the coffers of pro-crypto candidates, helping shape the elections.

NFTs: Low trading volume, high innovation

The SEC crackdown on crypto firms had weighed on the markets downturn following FTX collapse in November 2022, driving investors away from crypto products such as nonfungible tokens

Since then, NFT trading volume has plummeted from its 2021 peak, affecting protocols and platforms such as OpenSea. In 2023, the company laid off 50% of its staff amid the market turmoil.

Finzer says the NFT space is still flourishing, with innovation and new applications coming to life — especially in the gaming industry and art collectibles. Despite this, OpenSea has started exploring other areas, seeking to diversify its business to become a destination for all onchain trading beyond NFTs.

“I mean, for the first time in the history of the internet, people have the ability to own digital stuff, you know, in a real way,” Finzer said. “[...] you can move them around between different applications and take them with you wherever you go on the internet. And that's something that's really powerful.”