SEC staff clarify what control means in crypto governance

New answers added to the SEC staff’s crypto FAQ on 2 November distinguish broad participation in governance from control by a central party. The guidance is conditional and does not declare every governance token a non-security.

Staff say unaffiliated participants generally would not count as a central group merely for taking part in broad-based governance, provided they have no separate arrangement to act together. The assessment still depends on the facts. Even a group must have operational, economic or voting control to meet the definition being discussed.

Another answer focuses on practical powers: who can restrict access, alter voting processes, decide which validators participate or reverse transactions? Those controls matter more than a project simply describing itself as decentralised.

The update also separates a network’s useful operation from its independence of central control. For readers assessing token claims, the useful question is who can actually change the system. These are staff views, not a new Commission rule; the FAQ expressly says it has no legal force and does not change existing law.