Two prominent crypto advocacy groups — the DeFi Education Fund and the Uniswap Foundation — have jointly urged the U.S. Securities and Exchange Commission (SEC) to adopt a light-touch approach when it comes to regulating decentralized autonomous organizations (DAOs).
In a letter dated May 27 and addressed to SEC Crypto Task Force lead Hester Peirce, the groups argued that DAOs should not be automatically subjected to the securities classification under the Howey test if they are “sufficiently decentralized.”
The letter maintains that DAOs with dispersed governance and no identifiable management structure should be treated more like collections of individuals rather than centralized corporate entities.
“If a DAO has a dispersed collection of tokenholders who have the opportunity to actively participate in and govern the DAO and the network, it is sufficiently decentralized such that neither the network token for that DAO, nor transactions in which that network token are the object, should be considered a security,” the letter reads.
Regulatory Shifts Under the Trump Administration
The SEC’s approach to crypto has shifted since former crypto lobbyist Paul Atkins took over as chair under the Trump administration. Atkins has repeatedly stated that blockchain innovation should not be stifled by overregulation, and has emphasized the potential of blockchain to create “new forms of market activity.”
Shortly after taking office, Atkins the Biden-era regulatory stance and promised a more flexible attitude toward crypto assets.
During a May 20 oversight hearing, Atkins that the SEC’s Crypto Task Force will release its first official report in the coming months. The task force is also conducting a series of roundtable discussions with industry stakeholders to better shape future policy directions.
Disclaimer: This article does not constitute legal or investment advice.
