Federal Judge Rules Bored Ape NFTs Are Not Securities, Providing Regulatory Clarity

The Event in Detail

U.S. District Judge Fernando Olguin has dismissed a class-action lawsuit targeting Yuga Labs, the creator of the Bored Ape Yacht Club (BAYC) NFT collection, and several high-profile celebrities. The lawsuit, filed in 2022 by investors Adonis Real and Adam Titcher, alleged that Yuga Labs and celebrity promoters, including Justin Bieber, Paris Hilton, Madonna, Serena Williams, and Steph Curry, violated securities laws by promoting unregistered digital assets. Plaintiffs claimed celebrities were compensated or received free NFTs for their endorsements, misleading the public.

Judge Olguin based his decision on the Howey Test, the legal standard for determining if an asset qualifies as a security. The ruling found that Bored Ape NFTs did not satisfy key criteria, specifically lacking a "common enterprise," thus concluding they are not securities under federal law. While the ruling clears the defendants in this specific case, the plaintiffs have until October 10 to file an amended complaint. This judicial decision follows an earlier development where the U.S. Securities and Exchange Commission (SEC) officially closed its investigation into Yuga Labs regarding whether its NFTs should be classified as securities, with Yuga Labs stating, "NFTs are not securities."

Market Implications

This landmark ruling establishes significant legal precedent and clarity for NFT creators and marketplaces operating in the United States, potentially mitigating regulatory risks. The decision is anticipated to foster increased innovation and investment within the NFT space by delineating clearer legal boundaries. Market sentiment is generally characterized as cautiously optimistic, as regulatory certainty is often viewed positively by investors and developers. However, the immediate impact on the price action of existing NFT collections remains to be fully observed. Historically, the floor price of Bored Ape NFTs reached 13.75 ETH (approximately $29,650) following the SEC's announcement to close its investigation into Yuga Labs. This figure, however, remained significantly below its peak of 153.7 ETH (over $430,300) observed in May 2022. Concurrently, other collections like Yuga Labs' Mutant Ape NFTs and ApeCoin experienced declines of 95% from their 2022 highs, and CryptoPunks saw its floor price drop by over 70% from its peak.

Expert Commentary

SEC Commissioner Hester Peirce has previously offered clarity on the regulatory stance concerning NFTs with built-in resale royalties for creators. She indicated that such NFTs generally do not fall under securities laws, drawing parallels to compensation structures prevalent in the music and film industries. Commissioner Peirce explained that royalty features enable artists to benefit from the appreciation of their work in secondary markets without necessarily qualifying as securities, as these features typically do not confer ownership in a business or traditional profit rights to NFT holders. However, she acknowledged that legal complexities could emerge if NFT structures begin to promise royalty shares to holders beyond the original creator, as such arrangements might resemble profit-sharing schemes, potentially leading regulators to classify them under securities law.

Broader Context

The ruling aligns with a broader shift in the regulatory landscape for digital assets. SEC Chair Paul Atkins, in September 2025, identified cryptocurrency regulation as the agency's "number one task," indicating a move toward structured policy development over an enforcement-centric approach. This strategic pivot, coupled with concepts like an "innovation exemption" and a focus on asset tokenization, aims to reduce regulatory uncertainty and foster growth in the Web3 ecosystem. Institutional investors are playing an increasing role in the maturation of the NFT market, which is projected to exceed $120 billion. This maturation is being driven by demand for accountability and transparency, with legislative frameworks such as the U.S. GENIUS Act and EU MiCA regulations establishing critical guardrails. Custody solutions provided by entities like Coinbase and BitGo, alongside AI-driven AML tools, are standardizing institutional-grade compliance. Data indicates that 78% of institutional NFT portfolios now mandate third-party audits for provenance verification, underscoring the escalating demand for operational governance and credibility in the sector.

source:

[1] Bored Ape NFTs Are Not Securities, Court Rules in Landmark Decision (https://decrypt.co/342885/bored-ape-nfts-not- ...)[2] Class Action Dismissed, Celebrities Cleared in Bored Ape NFT Lawsuit - CoinCentral (https://vertexaisearch.cloud.google.com/groun ...)[3] Celebrities off the hook for promoting Bored Ape NFT | Courthouse News Service (https://vertexaisearch.cloud.google.com/groun ...)

Related News

Oct 03 2025, 19:15

UK FCA Lifts Retail Ban on Crypto ETNs, Allowing Trading on Approved Exchanges

Executive Summary Effective October 8, 2025, the UK's Financial Conduct Authority (FCA) has reversed its 2021 prohibition on retail investor access to crypto Exchange-Traded Notes (ETNs). This regulatory adjustment permits the trading of these products on FCA-approved, UK-based investment exchanges. The decision marks a significant policy shift aimed at broadening access to digital asset investments, with the FCA citing a maturing market and improved infrastructure. Despite the lifting of the ban for ETNs, the FCA maintains its restrictions on retail access to crypto Exchange-Traded Funds (ETFs) and derivatives, emphasizing a cautious and phased regulatory approach. The Event in Detail In an August 1 notice, the FCA confirmed the lifting of its ban on crypto ETNs for retail investors. The previous ban, enacted in 2021, was based on concerns regarding market volatility, consumer protection, and the inherent risks associated with these products. The regulator now indicates that the market has evolved, demonstrating better infrastructure, increased transparency, and a more informed investing public. David Geale, the FCA's Executive Director of Payments and Digital Assets, stated that crypto investment products are more comprehensible, and the supporting infrastructure has advanced. Crypto ETNs accessible to retail consumers must adhere to stringent conditions. They must be traded on an FCA-approved, UK-based investment exchange, such as the London Stock Exchange (LSE). The LSE's admission guidelines for Crypto ETNs specify that these products must be physically backed, non-leveraged, and have Bitcoin (BTC) or Ethereum (ETH) as their underlying crypto assets. The underlying assets must be wholly or principally held in cold storage by custodians subject to Anti-Money Laundering (AML) regulations in jurisdictions including the UK, EU, Jersey, Switzerland, or the United States. Furthermore, the market price of the underlying asset must be reliable and publicly available, sourced from a diverse range of pricing sources. Crucially, these crypto ETNs will not be covered by the Financial Services Compensation Scheme (FSCS), meaning investors will not be eligible for reimbursement in the event of losses. Firms offering cETNs must comply with updated financial promotion rules, ensuring marketing materials are transparent and not misleading. The FCA will continue to restrict retail trading of crypto derivatives. Market Implications The lifting of the ban is expected to facilitate increased retail investment in crypto assets within the UK, potentially leading to moderate capital inflows and heightened trading activity for compliant ETN products. This move positions the UK as a more accommodating jurisdiction for digital assets, which could attract further crypto businesses and foster innovation within the Web3 ecosystem. Companies such as BlackRock, the world's largest asset management company, and Bitwise are reportedly preparing to offer crypto ETNs or related products in anticipation of this regulatory change. This development may serve as a precursor for future regulatory considerations regarding crypto ETFs for retail investors, though the FCA has indicated that its framework requires further updating for such products. The cautious reintroduction of ETNs reflects a strategic balance between enabling investor access and maintaining regulatory oversight in a rapidly evolving market. Expert Commentary Industry participants have largely welcomed the FCA's decision. David Geale of the FCA emphasized that the decision provides consumers with more choice while ensuring protections are in place, allowing individuals to assess the suitability of such investments. Hunter Horsley, CEO of Bitwise, expressed enthusiasm, stating his company's excitement to serve more investors in the European market. Ian Taylor, a board adviser to the digital assets trade association CryptoUK, remarked that the UK had been an outlier on ETNs and expressed hope that the move would improve consumer protections. CryptoUK views this as a positive step towards broader acceptance and anticipates continued advocacy for lifting the ban on highly-regulated derivative products for retail investors. The organization has consistently highlighted the importance of regulatory clarity for the UK to become a global hub for crypto assets. Broader Context The FCA's policy shift aligns with a global trend of increasing institutional and retail interest in regulated digital asset products. While the UK had maintained strict prohibitions since 2021, the regulator had already begun easing restrictions for professional and institutional investors by March 2024, acknowledging the rapid evolution of digital asset infrastructure and growing demand. This phased approach reflects a deliberate strategy to integrate crypto assets into mainstream finance under controlled conditions. The initial ban was implemented due to concerns over extreme volatility, the lack of clear fundamental value for crypto assets, widespread investor misunderstanding of product risks, and the high potential for fraud and market manipulation. The current reversal indicates the FCA's assessment that market maturity, increased transparency, and improved understanding of risks mitigate some of these earlier concerns. The move reinforces the UK's ambition to become a leading hub for digital assets, while maintaining a commitment to consumer protection through strict listing requirements and continued exclusion of more complex products like derivatives and ETFs for retail investors.

Oct 03 2025, 18:49

Bitcoin Surges Towards $150,000 Amidst Altcoin Rallies and Regulatory Debates

Executive Summary Bitcoin has demonstrated a significant recovery, surpassing $118,500, with market analysts projecting a rapid ascent towards $150,000 and potentially $200,000. This surge is primarily attributed to growing institutional demand and anticipated capital inflows. Concurrently, Zcash (ZEC) emerged as a top performer among cryptocurrencies, registering a weekly gain exceeding 157%, fueled by its privacy features and strategic endorsements. In the decentralized finance (DeFi) sector, Hyperliquid, a perpetual futures exchange, attracted considerable attention, with industry leaders drawing parallels between its growth trajectory and Solana's early development. Meanwhile, the legal proceedings involving Tornado Cash co-founder Roman Storm continue to unfold, raising critical questions regarding developer liability and the future regulatory landscape for privacy-focused protocols. The Event in Detail Bitcoin's Continued Momentum Bitcoin witnessed a substantial rebound, pushing its value above $118,500, a level not seen since mid-August. Analysts widely anticipate further price appreciation, with Charles Edwards, founder of Capriole Investments, suggesting a breakout above $120,000 could swiftly lead to a rally towards $150,000 before year-end. This projection is underpinned by a confluence of factors, including its role as a safe-haven asset and potential increases in monetary supply. André Dragosch, head of European research at Bitwise Asset Management, presented an even more ambitious outlook, forecasting Bitcoin could reach $200,000 by year-end. This optimistic scenario hinges on the potential for U.S. 401(k) retirement plans to incorporate cryptocurrency, potentially unlocking $122 billion in new capital. Technical analysis further supports these predictions, with an emerging golden cross pattern identified as a precursor to a $150,000 price target in the fourth quarter. Institutional buying remains a principal driver of this price action, reinforcing Bitcoin's position as a core asset in the digital economy. Zcash Leads Privacy Coin Rally Zcash (ZEC) recorded an exceptional performance, surging over 157% in the past week, making it the highest-gaining asset among the top 100 cryptocurrencies. This rally is largely attributed to a renewed narrative emphasizing Zcash's design similarities with Bitcoin while incorporating enhanced privacy features. Key catalysts included the launch of Grayscale's Zcash Trust and a public endorsement from Naval Ravikant. Despite its impressive gains, the Relative Strength Index (RSI) for Zcash entered overbought territory at 77.7 in early October, indicating potential for a market correction. Trading volumes for Zcash also spiked by 1,150% to $292 million following Ravikant's endorsement, though shielded transaction volume, a measure of actual privacy usage, increased by a more modest 15.5% month-on-month in Q3 2025. This discrepancy suggests speculative buying may be outweighing sustained demand for privacy features in the short term, as only approximately 14% of the total ZEC supply is held in privacy-encrypted addresses. Hyperliquid's Ascendancy in DeFi Hyperliquid, a decentralized perpetual futures exchange, has garnered significant attention from market leaders. ARK Invest CEO Cathie Wood drew a direct comparison between Hyperliquid's current growth trajectory and Solana's early developmental phase, labeling Hyperliquid as "the new kid on the block." The platform currently trades at approximately $44.36 with a market capitalization near $12 billion and recorded $4.61 billion in perpetual volume over the past day. Operating as a layer-1 blockchain with one-block finality and a custom HyperBFT consensus, Hyperliquid aims to provide speed and liquidity comparable to centralized exchanges. This positions it competitively within the rapidly evolving landscape of decentralized trading infrastructure, attracting both retail traders and semi-professional quantitative firms seeking low fees, fast execution, and airdrop opportunities. Regulatory Scrutiny on Privacy Protocols: The Tornado Cash Case The legal battle involving Roman Storm, co-founder of Tornado Cash, continues to draw scrutiny from the cryptocurrency community. Storm is seeking acquittal on charges of unlicensed money transmission, money laundering, and sanctions violations. His defense argues that prosecutors failed to demonstrate intent to assist malicious actors in misusing the crypto mixer, asserting that the case rests on a theory of negligence not supported by law. This case has ignited widespread debate, with the pro-crypto Blockchain Association warning that a conviction could establish a "dangerous" precedent for developers of privacy-enhancing technologies. The outcome of this legal challenge is poised to have significant implications for the future development and regulation of decentralized privacy protocols. Market Implications The recent developments underscore a dynamic period in crypto markets. Bitcoin's potential climb to new all-time highs, propelled by institutional capital, could solidify its role as a macro asset and potentially accelerate broader corporate adoption. The surge in Zcash highlights a growing demand for privacy-preserving solutions, yet also brings into focus the ongoing regulatory challenges, including the EU's planned ban on privacy coins by 2027 and Dubai's 2023 prohibition. These regulatory headwinds pose a significant risk to the long-term sustainability and widespread adoption of such assets. The emergence of platforms like Hyperliquid signifies a maturation of the DeFi ecosystem, with decentralized exchanges increasingly challenging centralized venues by offering advanced trading functionalities. This trend suggests a potential shift where centralized exchanges may evolve into front-ends for DeFi aggregators within the next 5-10 years, as predicted by 1inch co-founder Sergej Kunz. The Tornado Cash legal precedent could dictate the future liability of software developers in the crypto space, potentially chilling innovation in privacy-focused applications if a broad interpretation of intent is adopted. Furthermore, the discussion around tokenized stocks, as noted by Dragonfly Executive Rob Hadick, suggests these assets may primarily benefit traditional finance by enabling 24/7 trading and improved economics, with unclear benefits for major crypto players like Ethereum, as institutions may prefer building their own controlled blockchain environments. Expert Commentary Industry leaders offer diverse perspectives on the market's trajectory. Charles Edwards of Capriole Investments asserts that the four-year market cycle theory remains pertinent, influencing investor behavior and potentially acting as a self-fulfilling prophecy. ARK Invest CEO Cathie Wood emphasizes Bitcoin's continued dominance, stating it "owns the cryptocurrency space when it comes to pure crypto," even as her firm explores other protocols like Solana and its related ecosystem exposure through Breera Sports. Zooko Wilcox, Zcash's founder, champions its "hybrid model—transparent and private transactions—that no other asset replicates," arguing for its resilience in an evolving regulatory landscape. Rob Hadick from Dragonfly noted that while tokenized equities undoubtedly benefit traditional finance seeking 24/7 trading, their advantage to established crypto ecosystems like Ethereum is less clear, as financial institutions often prefer proprietary, controlled blockchain solutions over sharing block space with general-purpose chains. Broader Context The current market movements suggest a broader trend of institutional integration into the crypto space, alongside a persistent demand for decentralized and privacy-centric solutions. The significant inflows into Bitcoin demonstrate increasing acceptance as a legitimate asset class, drawing parallels to gold's safe-haven rally. The rapid growth of Hyperliquid and other order-book decentralized exchanges highlights the continuous innovation within DeFi, offering advanced trading tools previously exclusive to centralized platforms. This competitive environment fosters technological advancements aimed at improving speed, cost-efficiency, and user experience. The ongoing legal challenges faced by privacy protocols, exemplified by the Tornado Cash case, underscore the tension between regulatory mandates for transparency and the fundamental user demand for privacy in digital transactions. The evolution of tokenized real-world assets also presents a complex interplay between traditional finance and the crypto ecosystem, indicating a future where both paradigms may coexist, albeit with distinct operational preferences and value flows.

Oct 03 2025, 18:17

Aave (AAVE) Token Climbs 6% as DeFi Market Reaches Record $219 Billion, Deposits Hit $74 Billion

Executive Summary The Aave (AAVE) token experienced a 6% weekly gain, outperforming the broader cryptocurrency market, as the decentralized finance (DeFi) sector reached a record $219 billion in assets under management. Aave's deposits climbed to a new high of $74 billion, largely driven by a new partnership with the Plasma stablecoin-focused chain. The Event in Detail Aave (AAVE), the native token of the prominent DeFi lending protocol, recorded a 6% increase over the past week and a 3.28% gain in the last 24 hours, trading at $274.18. This upward movement allowed the token to break key resistance levels, indicating a shift in market momentum. Concurrently, the total value locked (TVL) in the Aave protocol reached a record $74 billion, solidifying its position as the leading DeFi protocol. A significant contributor to this surge was Aave's recent partnership with the Plasma stablecoin-focused chain. This collaboration resulted in over $6.5 billion in deposits into Aave's Plasma lending market within less than a week of its launch. This rapid inflow of capital positioned Plasma as the second-largest network for Aave deployments, highlighting a strong uptake and institutional interest. Market Implications The strong performance of AAVE is set against a backdrop of a resurgent DeFi market, which has collectively achieved a record total value of $219 billion in assets. This milestone signals a substantial recovery from previous market downturns and reflects renewed investor confidence in the decentralized finance ecosystem. Aave's dominance in DeFi lending is evidenced by its approximately 35% market share, with over 1.2 million loans processed in the current quarter alone. This growth in Aave's deposits and the broader DeFi market suggests a potential "new DeFi summer," characterized by increasing borrowing volumes and new institutional entrants. The collaboration between Aave and Plasma, which has seen substantial liquidity inflows, is viewed by market participants as a significant step in directly connecting DeFi with traditional finance at scale. This integration is anticipated to set a precedent for future collaborations that could drive further capital into the sector, potentially enhancing Aave's market dominance and influencing other DeFi protocols. Expert Commentary Stani Kulechov, the CEO of Aave, has expressed optimism regarding the protocol's future, projecting a trillion-dollar market as real-world fintechs increasingly adopt on-chain solutions. Kulechov anticipates Aave's net deposits could reach $100 billion as early as 2025 or 2026, driven by the integration of seamless borrowing into Aave API layers for applications like payment processors and neobanks. While some market analysis points to a bullish sentiment for AAVE, particularly with technical indicators like the Relative Strength Index (RSI) moving above 50 and a bullish Moving Average Convergence Divergence (MACD) crossover, other assessments note a current "Bearish" sentiment in Aave markets, with the Fear & Greed index indicating "Fear." Broader Context The rebound of the DeFi sector to $219 billion in total assets signifies a full recovery from significant losses experienced in 2022. This recovery has seen Ethereum maintaining its position as a major player, holding 59% of all capital in the DeFi space, with Solana emerging as the second-largest ecosystem by TVL, followed by BNB Chain. Looking ahead, Aave's trajectory may be influenced by several factors, including its planned V4 upgrade, which aims for a unified liquidity hub across chains, potentially attracting over $100 billion in liquidity. Macroeconomic conditions, such as potential Federal Reserve rate cuts, could further impact DeFi yields. Regulatory developments, including proposals like the SEC's "Innovation Exemption" for DeFi protocols, present both opportunities for reduced compliance friction and risks, particularly concerning unregistered stablecoins like Aave's GHO. The ability of AAVE to maintain its position above key support levels, such as the 200-day Simple Moving Average (SMA) at $265, during these developments will be a critical indicator for its continued growth.