Gary Gensler, the chair of the Securities and Exchange Commission (SEC), has faced criticism regarding his understanding of digitized assets, particularly NFTs (Non-Fungible Tokens). This scrutiny comes in light of recent SEC decisions concerning prominent NFT collections.

During a lengthy committee hearing on September 27, U.S. representative Ritchie Torres questioned Gensler about the criteria that qualify an NFT as a security. Using Pokémon cards as an example, Torres extracted from Gensler that physical trading cards like Pokémon cards do not fall under SEC jurisdiction.

However, when Torres inquired whether these same cards, if tokenized on a blockchain, would be classified as securities, Gensler struggled to provide a clear response.

Unfazed by the lack of a definitive answer, Torres continued to seek clarification on whether the tokenization process itself was the determining factor in categorizing an NFT as a ‘security.’ Unfortunately, Gensler’s responses remained vague and indecisive, marked by phrases like “I’d have to know more” and references to the Howey Test, further contributing to the confusion surrounding NFT regulatory frameworks.

This exchange has raised concerns about the SEC’s approach to NFTs. In recent months, the commission has charged projects like Stoner Cats and Impact Theory with violating federal securities laws. However, many other NFT projects are under scrutiny by decision-makers who appear to have limited knowledge of the industry, leading to uncertainty in NFT regulation.