Polkadot’s native token DOT is no longer a security, according to the Web3 foundation.
Polkadot said it has been working with the Securities and Exchange Commission’s FinHub on the process.
The Web3 Foundation said that DOT has “morphed” from a security to software, perhaps accomplishing the same task that Ethereum completed. The SEC has utilized the “morphing” term in relationship to digital asset regulation in the past.
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.
— Web3 Foundation (@Web3foundation) November 4, 2022
The Foundation stated:
“W3F met regularly with the SEC and attempted to break new ground and comply with U.S. federal securities laws, with respect to the offer & sale, marketing & delivery to initial purchasers & treatment of retail purchasers, in line with public companies.”
Noting that in late 2019 the regulatory climate was “tense” Web3 Foundation said they approached FinHub on the challenge, taking the SEC up on its offer to come in and chat.
In a blog post, Daniel Schoenberger, Chief Legal Office of W3F, stated:
“In November 2019, the digital asset regulatory climate was tense. When W3F first approached FinHub, the SEC had recently filed its complaint against Telegram, and the FinHub staff’s Framework for “Investment Contract” Analysis of Digital Assets had been published.”
He added that their experience has been “good.” As well, he believes they have developed a workable theory of morphing a digital asset from a security to something else.
He stated:
“Consistent with the views that we have shared with the SEC staff, we are pleased to announce that DOT, the native digital asset of the Polkadot blockchain, has morphed. In our view, current-day offers and sales of DOT are not securities transactions, and DOT is not a security. It is merely software.”
The SEC has not (yet) commented on these statements.
DOT has risen in value by around 6% today. Its market cap stands at around $7.8 billion.
Polkadot is a multichain protocol that connects and secures a network of specialized blockchains, facilitating the cross-chain transfer of data or assets. Polkadot aims to provide a foundation for a decentralized internet of blockchains, or Web3.
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