Web3 Foundation Says Polakadot’s DOT Is Not A Security—Will The SEC Intervene?
There is a growing debate in the crypto industry that most digital assets sold for fundraising activities are securities, and the regulator has started assessing these crypto assets.
However, the Web3 Foundation and the Polkadot network want to kickstart the evaluation process to avoid the SEC labeling the asset as security.
SEC And Its Crypto Engagement
The US Securities and Exchange Commission (SEC) is the regulatory agency empowered by law to oversee the issuance and sale of securities in the United States.
It is worth noting that all crypto assets utilized to get funding are regarded as unregistered securities in line with the country’s laws.
The ICO event between 2017-2018 was the start of this funding model, even as the entities initiating the fundraising activity violated the existing federal securities laws. During this period, the SEC established FinHub, an innovative financial technology platform.
Furthermore, the aim of creating FinHub was to help investigate whether digital assets sold for fundraising drives satisfy the requirements for securities. Still, a previous study, “The Framework,” has suggested that all crypto assets violate securities laws.
But the researchers added that tokens might evolve and become securities. However, this argument is subject to the SEC’s interpretation. Meanwhile, the Web3 Foundation and Polkadot are convinced that DOT tokens are not securities and recently released a document to self-certify the asset as “software.”
Even though this does not imply that the regulator will be forced to see things the same way as the two entities, DOT also has a utility beyond being used as a fundraising token for Polkadot.
The asset may take the form of security when used as a fundraising token, but it has already evolved into more. It is worth noting that the foundation’s decision to discuss the proposed plan with FinHub shows their confidence level.
The Journey So Far
Three years ago, Polkadot and DOT began the change process to achieve a specific goal. The years spent discussing with the regulator should count for something, with close to half of the 50 engagements between the parties being formal gatherings.
The focus of the meetings has been the network’s technology, utility, and direction in the Web3 ecosystem, including every aspect of the Polkadot network and utility for its native token, DOT.
Polkadot is now paving the way for other projects to take a similar path in their engagement with the SEC regarding their company’s goal. However, this move doesn’t guarantee that the SEC will shake off the security label, but it offers hope for some.
Meanwhile, the SEC faces an uphill battle to evaluate the hundreds of assets to determine whether they are securities.
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