The art market has always been a securities market, we just couldn't see it, because objects got in the way. The art market is the market for "art as an investment." You're really buying an entry on an artist's catalogue raisonné, the list of all the artworks the art market attributes to that artist.
That ledger entry is usually accompanied by a physical token, typically a canvas or statue. However, only the ledger entry has valuable. You can tell this is true because if the connection between the ledger entry and the object is broken, the object is worthless, even though it hasn't physically changed.
The NFT market works exactly the same way, it just eliminates the object and enables collectors to trade ledger entries directly, rather than by proxy. Obviously, that's great, because it's cheaper and more efficient than trading fragile, costly objects. Now people can trade NFTs instead, what a relief.
So, what are you really buying when you buy an artwork or an NFT? A fractional interest in the commercial goodwill associated with an artist, or rather, a share of the artist's "clout." If the artist becomes an art star, then their clout will increase and you will be able to sell your artwork or NFT at a profit. But if their star fades, your artwork or NFT is worthless, just like any other failed investment.
The SEC very much doesn't want to regulate the art market – and hasn't. I suspect, despite recent grandstanding, the SEC will soon figure out that it doesn't want to regulate the NFT market either. If it starts regulating the NFT market, it'll be hard put to explain why it isn't regulating the art market as well. So it's likely only the most stock-like entities will face scrutiny.
The reason it'd be good for NFTs to be regulated, however, is because we live in a fame-based society and NFTs are a powerful tool for monetizing it. Celebrities can only capture a tiny fraction of the social value they generate, and there are countless people willing to bet on any given influencer, artist or otherwise's continued success. Regulated NFTs would unlock these new capital markets – and the world can march on into the intersection of ideas, money, art and celebrity.
– Brian Frye, artist and lawyer, writing first for CoinDesk's "Crypto 2023" series
