Davis Polk partner and ESG Risk practice head Joe Hall and partner Patrick Sigmon discussed the regulation of non-fungible tokens (NFTs) and memecoins as well as the implications of defining them as collectibles with Fortune. 

The articles explains that White House crypto czar David Sacks stated that NFTs and memecoins are neither securities nor commodities. Instead, he views them as “collectibles.”

Patrick noted that there is already a legal definition of collectibles under the U.S. tax code. “For tax purposes, your capital gains rate is materially higher,” he said.

However, Joe pointed out that there are no market regulations that apply to collectibles under U.S. securities law. He explained that just because David Sacks publicly called memecoins and NFTs collectibles, it doesn’t change their legal status. He added that Sacks’ comments “suggest a viewpoint that it would not be appropriate to regulate these things the way we regulate securities.”

“Crypto czar David Sacks says NFTs and memecoins are collectibles, not securities,” Fortune (January 24, 2025) (subscription required) 

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