ApeCoin Falls Sharply Amid the SEC’s Investigation Into Yuga Labs NFTs

ApeCoin fell sharply on Tuesday amid reports the Securities Exchange Commission is investigating Bored Ape Yacht Club parent Yuga Labs.
Image source: ApeCoin

Quick take:

  • ApeCoin on Tuesday fell sharply after news the SEC was investigating BAYC parent Yaga Labs.
  • Bloomberg reported that the US capital markets regulator is assessing if some NFTs should follow stock rules.
  • The Securities Exchange Commission is also reportedly examining the distribution of ApeCoin.

ApeCoin $APE on Tuesday plummeted by nearly 10% after news the US Securities and Exchange Commission (SEC) has launched an investigation into Yuga Labs, the parent organisation of the Bored Ape Yacht Club (BAYC) non-fungible token (NFT) collection, Cryptopunks and Meebits, among others.

An NFT is a digital representation of a music track, video clip, JPEG, artwork or a collectible stored on the blockchain. Although this segment of the crypto market emerged in 2017, it gained popularity during the pandemic before becoming a trendy buzzword in 2021.

Since then, NFTs have attracted some of the world’s biggest celebrities and brands, as they seek to augment their revenue streams.

According to the report by Bloomberg, the US capital markets watchdog is assessing if some NFTs should fall under the same regulations as stocks. The report also indicates that the SEC is examining the distribution of ApeCoin.

ApeCoin is the native token of ApeCoin DAO, the organisation overseeing the development of Yuga Labs’ Otherside metaverse and its associated projects. The token is used to facilitate transactions within the ecosystem, as well as, for governance purposes via ApeDAO.

The ApeCoin market cap is now down to $1.49 billion down from a session high of $1.62 billion. The token has also dropped two levels in the list from the biggest cryptocurrencies by market cap to 37, from 35.

Yuga Labs has established itself as one of the leading web3 players, with a specific focus on NFTs. The company is in the process of constructing the Otherside metaverse, home to Otherdeed NFTs.

Yuga Labs has indicated that it plans to gamify (integrate NFT characters into blockchain games) its NFT projects as part of its grand strategy for web3.

ApeCoin allows investors to profit from their entire Yuga Labs ecosystem through staking or trading the token on crypto exchange platforms. Whether this puts it closer to the category of fractionalised NFTs is yet to be determined.

In March, the SEC launched an investigation into NFTs to establish, which ones could be treated as securities. The US capital markets regulator was particularly interested in fractionalized NFTs. These are NFTs split into smaller more affordable units to allow retail NFT investors to buy blue-chip NFTs.

Yuga Labs is the parent organisation of several blue-chip NFT collections, including BAYC, Cryptopunks, Meebits and Mutant Ape Yacht Club (MAYC).

In July, the crypto exchange platform KuCoin launched an NFT ETF trading zone for fractionalised blue-chip NFTs, with the goal of bringing the most expensive NFTs to the mainstream.

Exchange-traded funds (ETFs) are regulated by the SEC, which is why leading fund issuers have targeted thematic ETFs as an avenue for investing in the metaverse and blockchain-related verticals.

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