Freeport clears SEC Reg A review for tokenized art offerings

It appears that the SEC has exempted NFT art tokenization from registration as security offerings.

On March 29, nonfungible tokens startup Freeport announced that it had passed a Regulation A review by the U.S. Securities and Exchange Commission to launch its blockchain platform for crowd-ownership of a four-piece collection of Andy Warhol prints. Each piece consists of 10,000 shares, with a minimum purchase of 10 per individual, allowing a maximum of 1,000 individuals to own a piece of the Warhol art. 

The underlying pieces are prints of iconic blue-chip Warhol works, including Marilyn (1967), Double Mickey (1981), Mick Jagger (1975), and Rebel Without a Cause (James Dean) (1985). Current Andy Warhol paintings on the market can fetch anywhere between $6 to $195,040,000 apiece, according to MutualArt. 

As told by Freeport, the SEC clearance allows retail investors to gain fractional ownership of the fine arts market, which is typically exclusive to high-net-worth individuals due to pricing. “Customers can display their pieces in a high-resolution personal gallery, select frames, and view other community members’ galleries with rich social interactions that include comments, likes, and more,” wrote the Freeport team. Colin Johnson, CEO and Co-Founder of Freeport, commented:

“As more and more value moves on-chain, fractionalized art is increasingly being sought after by a younger, yet less financially flexible, class of investors.”

Anyone offering securities in the U.S. must either register with the SEC or seek an exemption. The Regulation A exemption allows companies, mainly startups, to raise $20 million in 12 months in a Tier 1 offering or $75 million in 12 months in the more stringent Tier 2 offering. On April 18, Gary Gensler, chairman of the SEC, will testify before the House Financial Services Committee on regulation towards crypto assets.