Polkadot blockchain’s native digital asset (DOT) has morphed and is no longer a security, it is software
According to Web3 Foundation Team, after taking the U.S. Securities and Exchange Commission (SEC) up on its offer to “come in and talk to us”, Web3 Foundation announce a landmark achievement towards the realization of Web 3.0: the Polkadot blockchain’s native digital asset (DOT) has morphed and is no longer a security. It is software.
Web3 Foundation makes bold claim to SEC: ‘DOT is not a security. It is merely software’
Daniel Schoenberger, chief legal officer of the Web3 Foundation Team, stated in a blog post on November 4 that Polkadot’s native token DOT had “morphed” into “software” rather than a security measure. Schoenberger stated that the assertion was “consistent with the views” that the company had shared with the SEC during conversations that began in November 2019.
“While the Polkadot vision had not contemplated that the blockchain’s native token would be a security, we understood that the SEC’s view was likely to be that the to-be-delivered token would be a security, at least at the time of delivery,” said Schoenberger. “Whatever it took in order for DOT, the native token of the Polkadot blockchain to be — or to become — a non-security, we were willing to do it.”
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.
— Web3 Foundation (@Web3foundation) November 4, 2022
The Web3 Foundation began fundraising in 2017, before the release of the SEC’s landmark 21A Report of Investigation: The DAO (“The DAO Report”), by U.S. federal securities regulations, but as of November 2019, we had not yet transferred any digital assets to original purchasers. While the Polkadot vision did not include the possibility that the blockchain’s native token would be considered a security, we anticipated that the SEC’s perspective was likely to be that the to-be-delivered token would be considered a security, at least at the time of delivery.
“As we saw it, the stakes were high, and the margin for error was slim. Whatever it took in order for DOT, the native token of the Polkadot blockchain to be — or to become — a non-security, we were willing to do it. And so, we decided to try to take the SEC’s FinHub staff up on the offer to “come in and talk to us”, the CLO said.
Their relationship with the SEC will be three years old in November 2022. We have met with FinHub officials regularly for the past three years. As a result, we have taken a compliance approach comparable to our approach to technological development: head down and devoted while setting the bar high. We have attempted to break new ground in our interactions with the SEC since the beginning, complying with U.S. federal securities laws, including the offer and sale, marketing, and delivery of tokens as securities to initial purchasers, and the treatment of retail purchasers, generally in line with public companies.
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