Two artists have filed a lawsuit against the Securities and Exchange Commission (SEC) to protect their digital artwork sold as non-fungible tokens (NFTs) from regulatory oversight. The artists argue that the SEC’s interpretation of the U.S. Supreme Court’s 1946 ruling in SEC v. W.J. Howey, which defines an investment contract, exceeds the agency’s authorized power. The SEC has applied Howey in two lawsuits against NFT sellers, claiming that the sale of NFTs constitutes an investment contract. However, the SEC has not clarified when the sale of an NFT is considered a securities offering. The artists are seeking a court ruling to ensure that their upcoming NFT projects do not violate SEC rules and to prevent the SEC from bringing a lawsuit against them for failing to register their projects. The artists involved in the lawsuit are Jonathan Mann, a songwriter who sells songs as NFTs, and Brian Frye, a law professor who creates artwork on legal scholarship and sells it as NFTs. The SEC is yet to comment on the lawsuit. Phelps Dunbar LLP and Morrison Cohen LLP are representing the artists in the case.