U.S. Securities and Exchange Commission (SEC) commissioner Hester Peirce recently clarified that non-fungible tokens (NFTs) with creator royalties are generally not considered securities. In a public speech, she highlighted the resemblance of these royalty mechanisms to how streaming platforms pay creators for copyrights. This form of revenue distribution does not constitute ‘share in corporate profits,’ according to her, as defined by traditional securities law. Adding clarity, Atlas Development Services Chief Legal Officer, Oscar Franklin Tan, stated that some media outlets have misconstrued Peirce’s remarks. He emphasized that the SEC has never viewed creator royalties as a subject of securities regulation. According to him, when royalties are solely attributed to the original creator, they resemble ‘business income,’ not ‘investment returns.’ However, if an NFT’s design involves distributing royalty profits to multiple holders, it could potentially trigger securities compliance issues.