SEC clarifies crypto governance and centralization rules
6.8 Regulation SEC clarifies that independent token voters are not a central party, but unilateral control may indicate centralization. Actual control and privileges are key for regulatory classification.
The U.S. Securities and Exchange Commission (SEC) has issued updated guidance and FAQs to clarify how crypto token governance, decentralization, and the concept of a "central party" are regulated. The SEC distinguishes between independent participation in governance and situations where control is coordinated or unilateral. According to the SEC, token holders who vote independently and are not bound by agreements to act together generally do not constitute a central party. However, if an individual or group holds unilateral powers—such as controlling protocol access, upgrades, or validator admissions—they may be considered a central authority. The guidance further explains that announcing buybacks for non-security tokens, without central managerial control, does not automatically create managerial obligations. The SEC emphasizes that actual administrative privileges and the substance of control are more important than the appearance of decentralization, urging projects to carefully assess their governance structures. While not legally binding, these clarifications are expected to influence governance practices and market sentiment.
