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Unaffiliated Governance Voters Generally Aren’t a Controlling ‘Group,’ SEC Staff Say
New staff answers cover token voting, governance housed in foundations and powers like reversing transactions, though they bind no one and name no project.
Dextape brief
SEC staff in the Division of Corporation Finance said token holders who vote through a crypto network's governance system generally do not form a controlling group under the agency's digital commodity framework. The three answers, added to the crypto FAQ on November 2, tie to the March 17 Interpretive Release's definition of a central party. That definition covers any person, entity or group with operational, economic or voting control, yet leaves the meaning of group unexplained. One answer says unaffiliated participants without any formal or informal agreement to act together, including through delegation, generally are not a group when the system sits in a foundation and votes come from the native token. Staff say the views carry no legal force.
Why it matters: It shows how regulators may read control in token governance, which bears on whether voting token holders could count as a central party.
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Terms in this story
- Governance
- The process for deciding changes to a protocol and its settings, whether through token-holder votes, a foundation or core developers.
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