Coinbase’s Stand With Crypto Launches $6M Legal Fund for NFT Projects

September 14, 2024

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Coinbase-led political advocacy group, Stand With Crypto, has announced the launch of a $6 million legal defense fund aimed at supporting non-fungible token (NFT) projects facing regulatory challenges.

Unveiled on September 13, the Creator Legal Defense Fund is backed by popular venture capital firm a16z and major NFT marketplace OpenSea, along with leading law firms including Fenwick & West LLP and Latham & Watkins LLP.

Mounting Legal Threats

The fund’s establishment comes in response to mounting legal threats against blockchain-based projects, particularly from the U.S. Securities and Exchange Commission (SEC). Stand With Crypto’s website emphasized the growing regulatory pressure, citing OpenSea’s recent Wells notice — a formal precursor to a lawsuit — as evidence of the challenges artists and creators in the NFT space face. The advocacy group stated:

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“Today, we raise our shield to protect a foundational part of the crypto community. This fund is expected to allow creators to stand their ground against “misguided actions from the SEC.”

The SEC has increasingly targeted crypto firms, accusing several, including Coinbase, Kraken, and Binance, of violating securities laws related to fungible tokens. OpenSea, in particular, has been under scrutiny for allegedly selling unregistered securities in the form of NFTs.

Other Efforts

As NFTs continue to gain traction as digital collectibles, the debate over their classification intensifies. Some advocates, including the Digital Chamber, have pushed for legislation that would classify certain NFTs as consumer products rather than securities, exempting them from federal securities regulations.

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Coinbase, a vocal advocate for crypto rights, is positioning itself at the forefront of these regulatory battles, with Stand With Crypto playing a key role in shielding the burgeoning NFT sector.

Coinbase has taken a leading role in advocating for cryptocurrency. After launching the Stand With Crypto initiative in 2023, the exchange contributed substantial funds to Fairshake, a political action committee (PAC) focused on the crypto industry. Venture capital firm a16z also played a significant role as one of the top donors to the PAC.

Stand With Crypto evaluates candidates in U.S. federal elections, assigning ratings from ‘A’ to ‘F’ based on their stance on crypto-friendly policies. Republican presidential candidate Donald Trump received an ‘A’ rating, while a rating for Democratic candidate Kamala Harris has yet to be determined.