In a recent move, crypto lobby group, the DeFi Education Fund and the Uniswap Foundation have urged the Securities and Exchange Commission (SEC) to refrain from regulating most decentralized autonomous organizations (DAOs).
The groups sent a letter on May 27 to Hester Peirce, the lead of SEC’s Crypto Task Force, asserting that DAOs should not be regulated under the Howey test if they are “sufficiently decentralized.” They argue that DAOs, being non-identifiable and uncoordinated groups, should not fall under regulations designed for securities.
Instead of treating them as traditional entities, the letter spotlights to consider DAOs as either individuals or a group of individuals, unless proven otherwise. The lobby groups cite that DAOs having a well-dispersed group of token holders with ample opportunities to actively participate and govern the DAO should not be regulated as securities.
This move comes as a direct response to Peirce’s statement in February, in which she invited comments on cryptocurrency enforcement policies.
Currently, the SEC’s stance on cryptocurrencies is faltering with the former crypto lobbyist Paul Atkins leading the agency. Atkins has strongly maintained that blockchain technology can offer new avenues of market activity, also remarking that regulation should not stifle innovative approaches in the sector.
In conclusion, the lobbying from crypto groups and the viewpoint of the SEC’s current leadership hint at a potentially favorable regulatory climate for DAOs and the overall crypto ecosystem. The outcome of these dialogues will significantly define the future growth landscape of these cutting-edge decentralized organizations and the fin-tech industry at large.
