Are NBA Top Shot NFTs securities?

GM. As we wrap up another week of staring at computer screens and looking at JPEGs, let's take a moment to appreciate the fact that at least our virtual assets won't get stolen by real-life burglars. Small victories, my friends.

Today we cover:

• Blur Farming goes on

• Are NBA Top Shot NFTs securities??

• This DAO buys an actual golf course (not a virtual one)

• News & New Projects to watch for

Market Update: Blur Farming Goes On

While NFT volumes are near their highs for the year, the floor prices for most NFT collections haven't moved much. Bored Apes are at 73 ETH, MAYC at 16.5 ETH, and Azuki at 15 ETH — pretty much unchanged.

This suggests that most of the activity is from traders bidding and selling to farm BLUR tokens, rather than making a directional bet. Take note that Blur teased that it is considering allowing people to bid on NFTs that were flagged by OpenSea as "stolen". That would be a pretty big FU to OpenSea.

Are NBA Top Shot NFTs Securities?

💲 What to know: A Federal judge has denied Dapper Lab's motion to dismiss a class-action lawsuit against it. The lawsuit alleges that NBA Top Shot NFTs are securities and that they were sold illegally.

This means that the case will proceed to trial. Dapper Labs is the creator of the mega-hit NBA Top Shot and also the FLOW blockchain.

☘️ In the weeds: The headline when the news dropped was shocking to the NFT space because it's the first time we're seeing NFTs potentially get classified as securities in a court of law.

Should we be worried? Probably not yet. Nothing has been decided so far.

The "Howey Test" was invoked: this is a test to determine if something is a security:

• Does it involve an investment of money?

• In a common enterprise?

• With reasonable expectation of profit?

• Derived from the efforts of others?

One of the reasons cited by the judge is that Dapper Labs could be funding the FLOW blockchain (another of its products) through the sale of its NBA Top Shot NFTs. 

+People who bought NBA Top Shot NFTs have expectations of profit, and often purchased it for investment purposes.  

+Buyers need to rely on "Dapper Lab's expertise and managerial efforts".

All of these seem to suggest that NBA Top Shot NFTs could not be ruled out as a security, although the case still needs to be proven in court.

🤑 Why it matters: If NFTs become classified as securities, this means that anyone who issues an NFT (in the US at least) needs to go through the proper regulatory process, similar to issuing a stock. This is highly impractical.

If I were an artist and want to release my work as an NFT, do I have to also pay a lawyer and learn securities law? 

Hide your Pokemon cards, they're no longer safe. The Howey Test is broad and to be honest almost anything can be twisted to be presented as a security. We need new laws for the emerging new class of digital assets, rather than attempting to regulate by enforcement or fitting old laws into this new world.

A guilty ruling here would be a net negative for the NFT space and hamper innovation. We don't think that is the most likely case, but will be watching for the outcome. Dapper Labs has 3 weeks to respond.

Today's News & Coolest Tweets

• Worldwide Webb raises $10M from Pantera Capital

• 3AC's NFT collection (includes "The Goose", a grail Ringer) to go into liquidation sale

• Uniswap now enables you to purchase NFTs using ERC-20 tokens, like UNI.

• Art Blocks expands its marketplace, continues to protect creator royalties

🐥 LinksDAO to buy an actual golf course

🐥 Spotify enables token-gated playlists

🐥 Most of Blur's volume comes from 300 wallets

🐥 A strategy for Blur

New Projects Corner

🍿 (Game) Claim your Lost Realms community token (72 hours)

🍿 Coinbase launched its L2 chain, mint a free commemorative NFT

🍿 (Art) OSF's next art collection on 9 March

That's it for today folks, see you tomorrow. If you want more, follow us on Twitter (@the_metadata).  And if you aren't already a subscriber, join us now to get all the daily alpha you need.

We're looking to improve the newsletter and make it as relevant as possible for you. If you have any feedback to share — please just reply to this email and let us know. Or even to just say 'Hi'. 

Disclaimer: This newsletter is for educational purposes only. None of this is financial or investment advice. It is not a solicitation to buy or sell any assets. Minting and buying NFTs is risky. Please do your own research.