A U.S. federal court has ruled that Bored Ape Yacht Club (BAYC) NFTs and ApeCoin are not securities, providing much-needed clarity on their legal status. The decision, made by Judge Fernando M. Olguin in California, dismissed a 2022 lawsuit against Yuga Labs, which alleged the unauthorized sale of securities and misleading investors. This verdict is a significant win for Yuga Labs and has broader implications for the legal classification of NFTs in the industry.
Details of the BAYC and ApeCoin Verdict
The court analysis determined that BAYC NFTs and ApeCoin did not meet the criteria for securities under the Howey Test. Judge Olguin rejected the plaintiffs’ claim that purchasing NFTs was equivalent to investing in Yuga Labs, with profit expectations tied to the company’s performance. The ruling emphasized that merely discussing prices and transaction volumes does not inherently create profit expectations.
Furthermore, the possibility of future privileges, membership benefits, or community access does not alone convert NFTs into securities. Yuga Labs’ positioning of BAYC as a “digital collectible” focused on social identity, content ownership, and community culture, paired with a one-time acquisition fee and the absence of a profit-sharing model, were factors distancing it from being labeled as securities.
Impact on the NFT Market
The ruling highlights that NFTs, ranging from art and in-game assets to membership-focused collections, can be positioned outside the realm of securities regulation with responsible marketing and clear value propositions. This perspective could limit the scope of class-action lawsuits and bring clearer boundaries to regulatory enforcement.
Judicial findings suggest that when projects are built on utility value, cultural significance, and community engagement rather than financial returns, legal risks are reduced. Community reactions support this, with industry participant Rain noting that the decision establishes a clear boundary separating NFTs from financial instruments, potentially influencing future project designs.
From Yuga Labs’ viewpoint, the ruling strengthens brand credibility and creates a strong reference framework for general project communication and tokenomics strategies.
According to CoinMarketCap data, at the time of writing, ApeCoin experienced a 3.17% increase over 24 hours, trading at $0.5729. However, this value is 98.55% below its all-time high of $39.40 reached on March 17, 2022.
