SEC issues new crypto guidance on centralization and blockchain governance

The U.S. Securities and Exchange Commission (SEC) has issued its latest guidance on digital assets, offering detailed insights into when a blockchain network crosses the threshold from decentralized governance to centralized control, a key factor in determining its regulatory classification. In a November 2 update, the SEC’s Division of Corporation Finance expanded its cryptocurrency framework with three new questions addressing governance systems, validator responsibilities, and the distinction between functional and decentralized blockchains. This addition builds on the existing framework that separates digital commodities from assets distributed through securities investment contracts. The new guidance underscores that participation in governance—such as voting on protocol changes or coordinating through foundations—does not automatically render all participants a single controlling entity.

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