In a significant ruling highlighting the uncertain regulatory landscape for digital assets, a federal judge in New Orleans has thrown out a lawsuit brought by two NFT creators who sought to stop the Securities and Exchange Commission (SEC) from treating their work as securities. The case illustrates both the growing tension between artists and regulators in the digital economy and the challenges courts face in addressing hypothetical enforcement disputes.
📌 The Lawsuit: NFT Creators Seek Protection
The plaintiffs in the case were Jonathan Mann, a musician best known for writing and selling songs as NFTs, and Bryan Frye, a law professor and conceptual artist. Both men argued that the SEC’s past actions against certain NFT projects left them vulnerable to future enforcement, despite the fact that their own work had not been directly targeted.
They contended that the absence of clear guidance on whether NFTs fall under securities laws created an untenable risk. According to their complaint, artists and creators like them face the constant fear of the SEC retroactively classifying their work as unregistered securities offerings. They sought a court order prohibiting the SEC from initiating such actions.
⚖️ The Judge’s Ruling: Speculative Fears Don’t Create Standing
On September 30, 2025, U.S. District Judge Greg Guidry dismissed the lawsuit, ruling that the plaintiffs lacked standing. He explained that Mann and Frye had failed to show a “concrete or imminent injury” that courts could address.
Judge Guidry emphasized that the SEC had not accused either artist of violating securities laws, nor had the agency taken steps suggesting an imminent enforcement action. While acknowledging the regulatory uncertainty surrounding NFTs, he stated that courts cannot issue advisory opinions or preemptively block agencies from acting based on hypothetical scenarios.
In short, the artists’ case rested on “fear of possible future enforcement,” which, according to the court, is not enough to invoke judicial review.
🔍 SEC’s Position on NFTs Remains Murky
The ruling comes against the backdrop of the SEC’s evolving approach to digital assets. While the agency has pursued several enforcement actions in the crypto space, including high-profile lawsuits against token issuers and exchanges, its treatment of non-fungible tokens (NFTs) has been less consistent.
The most notable action to date involved the Stoner Cats NFT project, an animated series funded through NFT sales. In that case, the SEC accused the creators of conducting an unregistered securities offering and imposed a $1 million penalty. That enforcement, however, did not settle the broader question of whether all NFTs should be considered securities.
Judge Guidry noted that past SEC enforcement actions, such as the one involving Stoner Cats, do not establish binding rules for the entire industry. They also do not prove that creators like Mann or Frye are at imminent risk of prosecution.
🎨 Artists’ Arguments & Broader Concerns
Mann and Frye stressed that their NFT work is artistic expression, not an investment vehicle. Mann, often referred to as the “Song a Day” artist, has built a career selling his daily songs as NFTs, while Frye has minted conceptual art pieces in tokenized form. Both argued that SEC regulation of NFTs could chill artistic freedom and create an overbroad application of securities law.
Their case also reflected a broader frustration within the creative community. Many artists feel left in a regulatory gray area, uncertain whether their sales of tokenized works could one day be reinterpreted as unlawful securities transactions.
While sympathetic to these concerns, the court held firm that preemptive challenges cannot be used to resolve hypothetical disputes.
📊 Implications of the Ruling
This decision has several implications for artists, lawyers, and the broader NFT market:
- Regulatory Ambiguity Remains: The ruling did not clarify whether NFTs are securities. It simply stated that courts cannot weigh in without a concrete case or controversy.
- Risk Persists for Creators: NFT artists must continue operating without clear guidance, leaving them exposed to potential enforcement actions in the future.
- Limits of Preemptive Litigation: The case sets a reminder that courts will not step in until there is a direct enforcement action or tangible harm.
- Pressure on Policymakers: With regulatory clarity absent, industry participants may increase calls for Congress or the SEC to issue specific rules addressing NFTs.
🧭 Looking Ahead: What Comes Next?
The dismissal leaves NFT creators in limbo. While the SEC has shown willingness to crack down on certain token-based projects, it has not issued comprehensive regulations that clearly define the legal status of NFTs. For now, the agency continues to rely on case-by-case enforcement, leaving the industry uncertain.
Legal experts suggest that more lawsuits are likely to follow as artists, collectors, and platforms test the boundaries of securities law in relation to NFTs. At the same time, lobbying efforts aimed at pressuring Congress to pass digital asset legislation are expected to intensify.
For creators like Mann and Frye, the ruling may not end their concerns — but it makes clear that courts will wait for actual enforcement before intervening. Until that happens, NFT artists will continue to create under a cloud of regulatory ambiguity, with the SEC holding the power to determine, at its discretion, whether their work crosses into securities territory.
📌 Conclusion
The rejection of Mann and Frye’s lawsuit underscores a central truth: U.S. courts will not resolve theoretical disputes over NFTs until the SEC takes concrete action. For now, creators remain caught in a gray zone, highlighting the urgent need for clearer policies to define how securities law applies to digital art.
As the NFT market evolves and billions of dollars flow through blockchain-based art, music, and collectibles, the demand for legal clarity will only grow louder. This ruling serves as a reminder that, for now, the uncertainty remains — and artists must navigate the digital frontier at their own risk.
👉 The legal landscape around NFTs and digital assets is shifting fast — and attorneys need to stay ahead. Whether you’re interested in securities regulation, intellectual property, or emerging tech law, the best career opportunities are out there waiting for you.
🔗 Explore thousands of legal jobs and find your next move today at LawCrossing.
