The Polkadot blockchain’s token should no longer be deemed a security subject to SEC regulation, according to the Web3 Foundation, which sponsors its development.
In a recent blog post, Chief Legal Officer Daniel Schoenberger stated:
“The Polkadot blockchain’s native digital asset has changed and is no longer a security. It’s a piece of software.”
Schoenberger stated that the foundation has been working with the SEC for three years to find a way to allow a digital asset that was first issued as a security to be re-evaluated at a later date.
The transition would be similar to other simple agreements for future tokens, or SAFTS, a legal framework that offers investment contracts for future tokens as security while keeping the tokens themselves separate from the sale.
Following the SEC’s historic DAO Report in July 2017, which said that an ICO might be a securities offering and so require registration, this regulatory sanctuary became a serious problem.
The crypto sector’s following interactions with the SEC have been controversial, with industry participants dismissing the SEC’s “come in and talk to us” approach.
Schoenberger emphasized the SEC’s spirit of open communication and conversation:
“The stakes were high, and the margin for the mistake was narrow. We were prepared to do whatever it needed for DOT, the Polkadot blockchain’s native coin, to be — or become — a non-security.”
There are still questions about whether the present SEC believes SAFTS can effectively decentralize. Requests for comment were not returned by the SEC.
The Web3 Foundation reported sales of Polkadot SAFTs under Reg. D, which is reserved for accredited investors, in October 2017 and March 2019. The Polkadot network did not officially begin until December of last year.
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