New Theory Presented to SEC: This Altcoin Is Just Software!

The Web3 Foundation presents a new theory that will guide the SEC’s perspective on altcoin projects. Backed by Gavin Wood, one of the co-founders of Ethereum, the Foundation said that some altcoins are just software.

Web3 Foundation presented a new perspective to the SEC

According to Daniel Schoenberger of the Web3 Foundation, the team developed “a viable theory of how token conversion could be achieved” for the DOT, based on the SEC’s bills and federal securities clauses. The organization that supports Polkadot’s research and development argued that the SEC should not consider the DOT a security under its regulatory mandate.

In a November 4 blog post, Daniel Schoenberger, chief legal officer of the Web3 Foundation Team, said that Polkadot’s native token has “changed” and is more “software” than a security. Schoenberger said the argument is “consistent with the views” he shared with the SEC following the debate that began in November 2019:

While the Polkadot vision did not consider the blockchain native token to be a security, we understood that the SEC’s view was that the token to be delivered would at least be a security at the time of delivery.

The CLO noted that the Web3 Foundation has systematically come to terms with FinHub, the SEC’s fintech wing. He also said that it has come to an end as a module of lead Gary Gensler’s longstanding “come and talk” proposal to crypto companies. According to Schoenberger, the team developed “a viable theory of how token conversion could be achieved” for the DOT based on the concerns of the SEC and US federal securities.

It’s unclear whether the federal regulator will respond to arguments that apparently violate its rights, though the fundraising agency says it “shared this theory multiple times with the SEC” when it didn’t qualify as a security in the DOT. The SEC has often used enforcement actions as a basis for regulation. In July, the regulator specifically identified nine tokens as “crypto-asset securities” in a lawsuit against a former works manager at Coinbase.

The new recipe also addresses altcoins/tokens such as XRP

Schoenberger’s explicit thesis that the DOT token should be valued outside of the SEC’s regulatory oversight echoes that of many XRP proponents. Ripple is currently waging a legal battle with the SEC over allegations that the firm, co-founder Christian Larsen and CEO Brad Garlinghouse has raised more than $1 billion through unregistered securities sales using XRP. Ripple’s supporters have argued that the token is not a security and criticized the SEC for overstepping its mandate.

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