Checking your NFT Collection for Regulatory Compliance

Web3 is a wild west, but we still play by some important rules.

We heartily support innovation in the Web3 space and understand sometimes folks want to push boundaries. However, as a US-based company, there are limitations to what Crossmint can be used for. 

Crossmint cannot be used to mint any NFT that can be classified as a security.

How do you know if your NFT collection qualifies as a security, also known as an investment contract? Verify it against the Howey Test. If it meets all four criteria, it will fail the test and be considered a security.

Howey Test

Is your NFT:

  1. An investment of money
  2. In a common enterprise
  3. With the expectation of profit
  4. To be derived from the efforts of others
    (sourced from Investopedia)

Examples of NFT Collections Qualifying as Securities

Collections that may be at risk of being considered a security include:

  • NFTs that promise some sort of perpetual yield
  • Crypto mining fundraisers that fractionalize income generated from the mining operation into NFTs
  • NFTs that only require a one-time payment from the customer while offering a yield that relies on the efforts of the team to be successful

Internal Review & Appeals

Crossmint has an internal collections review team that verifies each collection passes the Howey test (does not meet all four criteria). If according to our findings, your project fails the test, we may remove your collection from our services. In that case, you can reach out and appeal the decision by providing enough evidence to support that your collection is not a security. We will then review such evidence and make a final decision that cannot be appealed.

We Can Still Help

Even though we cannot support collections that fit all four criteria with our payment products, we encourage you to reach out and see how we can support you in other ways.

We can support projects and collections with our payment products that do not meet all four Howey Test criteria.

For more information, refer to the following:

We apologize if this decision has caused you any inconvenience, but we are working very hard on making our product better for everyone–which starts with complying with all current and applicable regulations.

Thank you! 🍀

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