SEC Crypto FAQ Clarifies Governance in 3 New Entries
The staff says governance participants usually are not a central party if they are unaffiliated and lack an agreement to act together.
- On Nov 2, the SEC Division of Corporation Finance added three questions to The FAQ clarifying how Decentralization and central party definitions apply to token governance.
- These additions expand on the SEC framework distinguishing digital commodities from Securities, addressing when governance participants constitute a 'central party' and what powers amount to control over participation.
- Question 1.5 outlines examples of unilateral central party authority, such as modifying code or reversing transactions, while Question 1.4 clarifies that unaffiliated governance participants generally do not qualify as a central party.
- Miles Jennings welcomed the update, noting it clarifies how systems can maintain Decentralization while using legal entities such as DUNAs, though Avi Lev emphasized The FAQ carries no legal force.
- Journalist Eleanor Terrett noted The FAQ addresses Decentralization questions the Clarity Act aims to resolve, as Chair Paul Atkins previously described the underlying framework as an 'important bridge' while Congress advances legislation.
14 Articles
14 Articles
SEC Staff Says Token Holders Who Vote Don't Automatically Control a Network. What Does That Mean for Uniswap and Aave?
The SEC just said governance voters are not automatically in control of a crypto network, yet Uniswap and Aave barely budged while Coinbase and Circle surged. The reason why reveals a gap between regulatory clarity and what markets actually care about.
SEC crypto FAQ clarifies governance in 3 new entries
The U.S. Securities and Exchange Commission has updated its crypto asset FAQ with three entries explaining how shared governance, control over network access, and decentralization fit into its token classification framework. The SEC’s Division of Corporation Finance added questions 1.4…
SEC Staff Clarifies When Token Voting Signals Centralized Control
TL;DR SEC staff says broad token-holder voting generally does not create a controlling group when participants are unaffiliated and lack arrangements to coordinate outside governance. Unilateral authority over access, validator participation, upgrade voting, code changes or transaction reversals can indicate that a central party oversees participation in a crypto system. The November 2 FAQs also ...
SEC experts have clarified that independent investors participating in collective voting in crypto projects does not, in itself, constitute centralized control. The new guidance details the criteria for how projects are managed, but it is not legally binding.
New SEC Crypto FAQ Puts Token Buybacks Under Fresh Scrutiny
The latest SEC crypto FAQ update adds answers on governance, control and decentralization. Ordinary tokenholder voting does not by itself turn voters into a controlling group. Unilateral power over validators, code or transactions points to a central party. The FAQ reflects staff views only and changes no law. The Securities and Exchange Commission’s Division of [...]
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