Crypto Regulation

SEC Staff FAQ: Broad Governance Participants Usually Not Centralized Actors

Nov 2, 2026 14:54 ET · 3h ago

TREE NEWS update: The SEC’s Division of Corporation Finance updated its crypto asset FAQ on Nov. 2 with three new answers on asset classification. The FAQ states that participants in a functional crypto system’s broad governance structure generally do not constitute a “centralized entity” if they are unaffiliated and have no agreement, arrangement or understanding to act in concert; the same conclusion applies when governance sits with an organization, association or foundation. The FAQ also defines “oversight participation” and notes that “functional” and “decentralized” are distinct concepts. It represents SEC staff views only and has no legal force.

Original source

AI take

The practical weight here sits in the staff's willingness to treat diffuse, unaffiliated governance as something other than a centralized actor — a distinction that goes to the heart of how tokens get sorted under securities frameworks. Because it is staff guidance without legal force, it signals direction rather than settles doctrine, and its usefulness depends on how consistently it is applied in future no-action and enforcement contexts. Whether this reading hardens into a durable standard, or remains advisory color that courts and future commissions can set aside, is the open question worth tracking.

Generated by AI for reference only.

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