"Most DAOs Are Not Securities"…US Lobby Groups Urge SEC to Ease Regulations

US virtual asset (cryptocurrency) lobby groups have urged the Securities and Exchange Commission (SEC) to step back from regulating most Decentralized Autonomous Organizations (DAOs).

According to Cointelegraph, a virtual asset-focused media outlet, on the 27th, the DeFi Education Fund and the Uniswap Foundation sent a joint letter to SEC crypto task force chief Hester Peirce, arguing, "If a DAO is sufficiently decentralized, it should not be considered a security under the Howey Test."

The two organizations emphasized, "If token holders are in a distributed state and can actively participate in network governance, the network tokens of that DAO or transactions based on them should not be treated as securities." They added, "DAOs should be seen as individuals or loose collectives rather than specific entities, and should not be regulated as organized corporate forms."

Previously, Paul Atkins, the newly appointed SEC commissioner, had criticized the Biden administration's regulatory approach before taking office, stating, "Blockchain technology enables new forms of market activity." At the SEC oversight hearing held on the 20th, he said, "We will not stifle innovation." He also mentioned that the first Crypto Task Force report is scheduled to be released in the coming months.

The media outlet added, "This position was submitted as an official response to the opinion request made by Commissioner Peirce in February," and that "Recently, the SEC, led by Commissioner Paul Atkins appointed under the Trump administration, has shown signs of shifting toward a comparatively friendly regulatory stance."

Meanwhile, the Howey Test is a standard created by the U.S. Securities and Exchange Commission (SEC) in the 1930s to determine the status of securities, based on the farm subdivision case involving the Howey Company.