The Tool Desk
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What the 2021 headline actually referred to
On November 11, 2021, Futurism reported that the U.S. Treasury’s Office of Foreign Assets Control (OFAC) had sanctioned Chatex, a Latvian crypto exchange, and identified associated digital-asset addresses. The action also covered specified digital-art assets, including assets listed on OpenSea. It was a targeted sanctions action—not a law declaring NFTs, NFT marketplaces, or NFT technology illegal.
OFAC sanctions can block property and prohibit U.S. persons from dealing with blocked persons or property, unless an authorization applies. That means the legal question is whether a particular person, address, or property interest is blocked and whether a proposed transaction is authorized—not simply whether something is an NFT.
At the time, OpenSea said: “We automatically block addresses on the U.S. sanctions list from buying, selling, or transferring on OpenSea.” A marketplace’s screening or removal practices can affect whether an item is visible or usable there, but they do not turn every NFT into prohibited property or replace the sanctions rules.
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Which NFTs did the U.S. government block?
The 2021 reporting concerned specified digital-art assets associated with the sanctioned activity, not all tokens in a collection or all NFTs available on a particular marketplace. The available information does not establish a complete, current token-ID list of every NFT that may be blocked. A name, image, or marketplace listing alone is not enough to determine an NFT’s sanctions status.
For a current transaction, check OFAC’s live sanctions information and the marketplace’s current restrictions. A marketplace notice can be useful, but absence of a warning is not proof that a person or property is clear of sanctions. If an NFT, wallet, counterparty, or transaction may involve blocked property, do not proceed on the assumption that a token’s collectible status makes the transaction permissible; seek qualified sanctions-law advice.
Are NFTs securities or collectibles under current federal guidance?
In an interpretation released March 17, 2026, the SEC described a token taxonomy covering digital commodities, digital collectibles, digital tools, stablecoins, and digital securities. The joint SEC/CFTC interpretation published in the Federal Register on March 23, 2026, explains that crypto assets may be fungible or non-fungible. It characterizes digital collectibles as generally having artistic, entertainment, social, or cultural value or utility.
Under that interpretation, digital collectibles, digital commodities, and digital tools are not securities in themselves, while digital securities are securities. But the label “NFT” does not settle how a sale is treated. A non-security token may be offered or sold through an investment contract, which is a security. The token’s characteristics, how it is used, what buyers are promised, and the transaction structure all matter. Marketing that creates expectations of profit from the efforts of others can therefore raise securities-law questions even if the token is presented as a collectible.
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- Collectible: The token is presented for artistic, cultural, entertainment, or social value, or related utility. That category is generally not a security by itself under the interpretation.
- Digital security: The token itself falls within the interpretation’s digital-securities category and is treated as a security.
- Token sold through an investment contract: The token may not itself be a security, but the offer or sale can still be subject to securities laws.
These categories do not determine sanctions status, copyright ownership, or tax treatment. Those are separate questions.
What federal officials have said about NFT risks
The Treasury Department’s May 29, 2024 assessment identified NFTs as highly susceptible to fraud and scams and vulnerable to theft and money laundering. Treasury recommended increasing industry awareness, continuing to enforce existing laws and regulations, and considering further regulation. The assessment describes risks; it does not make every NFT unlawful.
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Brian E. Nelson, then Under Secretary of the Treasury for Terrorism and Financial Intelligence, said: “This risk assessment demonstrates Treasury’s commitment to analyze illicit finance risks of newer technologies and communicating them to industry and law enforcement.”
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Can you buy an NFT that is on a sanctions list?
Do not buy or transfer an NFT if the transaction would involve blocked property or a blocked person and no authorization applies. U.S. persons can face prohibitions under sanctions rules even when a transaction is conducted through a digital-asset platform. Whether a specific NFT or transaction is covered depends on the relevant listing and property interests; the 2021 article is not a complete guide to current listings.
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Before considering a purchase, assess these points separately:
- Sanctions: Are a seller, wallet address, or relevant property interest identified by current OFAC information or otherwise subject to restrictions?
- Economic function and marketing: Is the token functioning as a collectible, tool, commodity, or security, and are buyers being led to expect profits from someone else’s work?
- Venue and controls: What compliance screening and transaction restrictions does the marketplace apply? Those controls are not a substitute for a buyer’s own legal assessment.
- Rights conveyed: What ownership, license, or copyright rights do the sale terms actually grant? Owning a token does not, by itself, answer what rights in the associated work transfer.
- Tax reporting: Could the transaction or a later sale create a digital-asset reporting obligation?
If the sanctions status is uncertain, pause the transaction rather than trying to route around a marketplace restriction. A different platform, wallet, or payment method does not make a prohibited transaction lawful.
Do NFT sales have to be reported to the IRS?
The IRS treats NFTs as digital assets for tax-reporting purposes. Its digital-asset definition covers cryptographically secured assets, including NFTs that do not function as a medium of exchange. The IRS updated the relevant FAQ definition on December 15, 2025. This tax classification does not determine whether an NFT is blocked by sanctions or whether a sale is a securities transaction. Keep transaction records and consult current IRS guidance or a tax professional about how a particular purchase, sale, or other transaction should be reported.
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