DOT Is Software Not A Security, Web3 Foundation Tells SEC
CLO Daniel Schoenberger said that the team established a “workable theory of how token morphing may be accomplished” for DOT based on SEC concerns and federal securities rules.
The corporation that supports Polkadot’s research and development and oversees fundraising efforts for the blockchain has claimed that the United States Securities and Exchange Commission should not consider the DOT token to be a security within its regulatory authority.
Daniel Schoenberger, the chief legal officer of the Web3 Foundation Team, said in a November 4 blog post that Polkadot’s native token DOT had “morphed” and was now “software” rather than a security. Schoenberger said that the assertion was “consistent with the opinions it expressed with the SEC during November 2019 talks.”
“While the Polkadot vision had not contemplated that the blockchain’s native token would be a security, we understood that the SEC’s view was likely to be that the to-be-delivered token would be a security, at least at the time of delivery,” said Schoenberger. “Whatever it took in order for DOT, the native token of the Polkadot blockchain to be — or to become — a non-security, we were willing to do it.”
Web3 Foundation announces @Polkadot's native token DOT has morphed and is software, not a security!
After 3 years of proactive engagement with the @SECGov, W3F announces a landmark step towards the achievement of Web 3.0, a decentralized, trustless, serverless internet.
The CLO said that the Web3 Foundation has engaged routinely with FinHub, the SEC’s fintech arm, as part of chair Gary Gensler’s longstanding invitation to crypto businesses to “come in and talk.” Based on the SEC’s concerns and U.S. federal securities regulations, the team produced a “workable theory of how token morphing may be achieved,” according to Schoenberger.
Although the fundraising firm said that it “shared this theory with many times with the SCE” about DOT not being a security, it is uncertain if the federal regulator would react to the assertions that seem to infringe on their jurisdiction. The SEC has often used enforcement proceedings as a foundation for regulation; in July, in a case against a former Coinbase product manager, the commission designated nine tokens as “crypto asset securities.”
Schoenberger’s unambiguous assertion that the DOT token should be deemed outside of most of the SEC’s regulatory jurisdiction is shared by many XRP enthusiasts. Ripple is now embroiled in a legal fight with the SEC on charges that the company, its co-founder Christian Larsen, and its CEO Brad Garlinghouse generated over $1 billion via unregistered sales of XRP-based securities. Supporters of Ripple maintained that the token was not a security and condemned the SEC for exceeding its powers.
