SEC Updates Crypto Assets FAQ: Broad-Based Governance Participants Generally Do Not Constitute a "Central Party"
1 hours ago
U.S. Securities and Exchange Commission (SEC) Division of Corporation Finance has updated its "Frequently Asked Questions Regarding the Application of Federal Securities Laws to Certain Digital Assets and Transactions", with the latest revision date being November 2. This FAQ reflects the views of SEC staff, not SEC rules, regulations, or Commission pronouncements, and is not legally binding. The updated content primarily clarifies the definition of a "central party". SEC staff stated that participants in a functional crypto system’s broad governance structure, if unaffiliated and without separate agreements to act in concert, generally do not qualify as a "group of persons or entities" under the definition. A central party’s "oversight participation" refers to control over access to the protocol, validator, or user layers—such as unilaterally granting or restricting access, deciding or modifying upgrade and voting processes, controlling who may participate in consensus, or altering rule codes, rolling back transactions, or revoking access. The FAQ also notes that "functional" and "decentralized" are separate concepts: a functional crypto system where digital assets are native may exhibit decentralized traits, though the degree of decentralization varies based on facts and circumstances.
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