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Polkadot's Case Against SEC Classification of DOT as a Security

The Web3 Foundation argues that Polkadot's DOT token should not be classified as a security under SEC regulations, emphasizing its evolution as a software utility.
Published on 2022-11-05

Polkadot's Argument Against Security Classification

The Web3 Foundation, the entity behind Polkadot's research and development, has asserted that the U.S. Securities and Exchange Commission (SEC) should not classify the DOT token as a security. This stance was outlined in a November 4 blog post by Daniel Schoenberger, the foundation's chief legal officer.

The Evolution of DOT as Software

Schoenberger emphasized that DOT has "morphed" into a utility token, functioning as software rather than a security. This perspective aligns with discussions the foundation has had with the SEC since November 2019. The argument underscores DOT's role in enabling functionality within the Polkadot ecosystem, rather than serving as an investment vehicle.

Legal and Regulatory Implications

The foundation's position reflects its ongoing efforts to clarify the regulatory status of cryptocurrencies. By framing DOT as software, Polkadot aims to distinguish itself from traditional securities, potentially influencing how other blockchain projects approach regulatory compliance.

Ongoing Discussions and Industry Impact

The case highlights the broader debate over cryptocurrency regulation. As the SEC continues to evaluate digital assets, Polkadot's argument could set a precedent for other tokens seeking to avoid security classification. This development is critical for the blockchain industry, as clarity on regulatory classifications can significantly impact innovation and adoption.

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