Written by Hazel J. Greene, Senior Analyst

Ether.Fi, the liquid staking protocol, recently launched a collection of non-fungible tokens (NFTs) called Ether.Fan. However, shortly after the NFTs were listed on the prominent digital marketplace OpenSea, the platform halted their trading, citing concerns about financial activities that require registration and licensing. This unexpected move sparked a response from the Ether.Fi team, criticizing OpenSea’s decision and voicing their disappointment over the lack of communication.

On July 11, Ether.Fi’s NFT collection, consisting of 3,000 NFTs based on staked ETH, was released. The launch proved to be wildly successful, with all tokens minted within a day and over 6,200 ETH staked in the process.

Shortly after the listing, OpenSea removed the Ether.Fan collection from its platform without prior warning or notice. In an open letter, Ether.Fi’s CEO, Mike Silagadze, expressed his team’s dismay, highlighting their good relationship with OpenSea and the lack of communication surrounding the removal.

Silagadze revealed that his team attempted to reach out to OpenSea through multiple channels but received no response in the initial days. Eventually, they received a form letter response, in which OpenSea cited their policy of disallowing NFT collections involving financial activities subject to registration or licensing.

In his open letter, Silagadze criticized OpenSea’s decision, emphasizing the absence of any indication during their prior contact that the Ether.Fan collection would pose an issue. The CEO stated that the NFTs in the collection were part of a non-speculative project in the utility NFT category, designed to have practical applications.

Silagadze noted that OpenSea’s decision implied a conservative stance, suggesting that staked ETH might require licensing and registration. He criticized the platform, referring to it as a “de facto unlicensed casino where people engage in ruinous gambling and spend millions on pictures of monkeys,” while a genuinely useful collection like Ether.Fan faced restrictions.

Despite the removal from OpenSea, the EtherFan collection is still accessible on Rarible, another NFT marketplace, with a floor price of 0.12 ETH.

The response from Ether.Fi to the suspension of their Ether.Fan NFT collection on OpenSea highlights the potential issues arising from the regulation of financial activities in the NFT space. This incident serves as a reminder of the challenges faced by both creators and platforms in navigating this evolving landscape. It remains to be seen how this situation will impact future interactions between protocols and marketplaces in the NFT ecosystem.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.