The classification of digital assets has long been a contentious issue in the crypto world. Now, White House crypto advisor David Sacks has weighed in with a bold new perspective: non-fungible tokens (NFTs) and memecoins should not be treated as securities or commodities. Instead, he argues, they are best understood as collectibles—akin to vintage baseball cards or rare postage stamps.
In a January 23 interview with Fox Business, Sacks compared the cultural and emotional appeal of digital tokens like the Trump-themed memecoin to traditional collectibles. “It’s like a baseball card or a stamp,” he said. “People buy it because they want to commemorate something—a moment, an event, a feeling.”
This reclassification isn’t just semantic. It strikes at the heart of how regulators approach crypto innovation and could shape the future of digital asset regulation, tax policy, and market structure in the United States.
Why Classification Matters: Securities vs. Commodities vs. Collectibles
The way digital assets are categorized determines which regulatory bodies have authority over them—and what rules apply.
- If classified as securities, assets fall under the jurisdiction of the Securities and Exchange Commission (SEC), requiring registration, disclosures, and investor protections.
- If deemed commodities, they’re regulated by the Commodity Futures Trading Commission (CFTC), similar to oil or wheat.
- But if recognized as collectibles, they enter a different legal and tax framework altogether—one that currently lacks comprehensive market regulation but carries distinct tax implications.
Sacks emphasized the importance of clarity: “There’s a few different categories here, so defining the market structure is important.”
His comments come amid growing pressure for regulatory clarity in the U.S. crypto sector, where uncertainty has driven many innovators overseas.
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Tax Implications of the "Collectible" Label
Under current U.S. tax law, the Internal Revenue Code defines “collectibles” as items like art, antiques, coins, and precious metals. Gains from selling these assets are subject to a higher capital gains tax rate—up to 28%, compared to the standard long-term capital gains rate, which can be as low as 0%–20%.
Patrick Sigmon, a tax attorney and partner at Davis Polk, confirms this distinction: “For tax purposes, your capital gains rate is materially higher” when dealing with collectibles.
If NFTs and memecoins are legally treated as collectibles, investors could face steeper tax bills upon sale—especially those who’ve seen explosive returns from viral digital assets.
However, there’s a catch: while tax law recognizes collectibles, U.S. securities law does not have a formal category for them. Joe Hall, a capital markets lawyer also at Davis Polk, notes that “there is no market regulation that applies to collectibles under U.S. securities law.”
He cautions that Sacks’ statement doesn’t automatically change the legal status of NFTs or memecoins. “Just because someone calls them collectibles doesn’t make it so,” Hall said. “But it does suggest a viewpoint—that regulating these digital assets like traditional securities may not be appropriate.”
The Regulatory Crossroads: Clarity vs. Control
Sacks’ intervention highlights a pivotal moment for U.S. crypto policy. For years, the SEC has pursued an aggressive stance, treating many tokens as unregistered securities. This approach has led to high-profile lawsuits against major exchanges and projects, creating uncertainty for developers and investors alike.
By framing NFTs and memecoins as collectibles, Sacks proposes an alternative path—one that acknowledges their cultural value over financial utility. This distinction aligns with how many users actually engage with these assets: not for dividends or yield, but for community, identity, and nostalgia.
For example:
- A fan might buy a Trump memecoin not expecting profit, but to express political affiliation.
- An artist sells an NFT not as an investment vehicle, but as a digital signature of creative ownership.
These use cases don’t neatly fit into existing financial categories.
Sacks concluded his interview with a clear message: “What the industry wants more than anything else is regulatory clarity.” He expressed hope that a potential Trump administration could foster a more innovation-friendly environment, encouraging crypto businesses to return to American shores.
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Frequently Asked Questions (FAQ)
Q: Are NFTs currently classified as securities in the U.S.?
A: Not uniformly. The SEC evaluates tokens on a case-by-case basis using the Howey Test. Most NFTs—especially those tied to art or collectibles—are not considered securities unless they promise profit from others’ efforts.
Q: How are memecoins taxed if treated as collectibles?
A: If classified as collectibles, capital gains from memecoins would be taxed at a maximum rate of 28%, rather than the lower rates applied to typical crypto investments treated as property.
Q: Can the White House unilaterally redefine crypto assets?
A: No. While officials like Sacks can influence policy direction, formal classification requires action from Congress or regulatory agencies like the SEC or CFTC.
Q: What’s the difference between a security and a collectible in crypto?
A: A security implies an investment contract with expectation of profit. A collectible is valued for personal or cultural significance—not financial return.
Q: Could this ‘collectible’ framework become official policy?
A: It’s possible. With increasing bipartisan support for clearer crypto rules, legislative efforts may adopt distinctions between utility tokens, securities, and non-financial digital items.
Q: Does calling something a ‘collectible’ protect it from regulation?
A: Not entirely. While securities regulations may not apply, other laws—including anti-money laundering (AML) rules and tax codes—still govern transactions.
The Road Ahead: Innovation Needs Frameworks
David Sacks’ comments reflect a growing recognition that one-size-fits-all regulation fails to capture the diversity of blockchain-based innovations. Treating every token as a security risks stifling creativity and pushing development offshore.
A nuanced approach—one that separates speculative instruments from cultural artifacts—could unlock responsible growth while protecting consumers.
As debates continue in Washington, one thing is clear: regulatory clarity is no longer optional. The U.S. stands at a crossroads. Will it lead the next wave of digital innovation—or watch from the sidelines?
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